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8 September2009

Tax rate delay keeps hybrid cars off Vietnam’s road

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The Vietnam Registration Administration (VRA) has still not established the tax rate on hybrid (gasoline-electric or bio-electric) autos and thus HCM City importers hesitate to put the cars on the market, reported

The VRA has not declared the tax that importers will have to pay, so the sellers have no idea how to price the cars. If they sell cars at low prices and are later required to pay high taxes, they will lose significant amount of money.

On August 31, a HCM City importer contacted the General Department of Customs, asking to state the luxury tax rate they have to pay for the hybrids clearly, so that they can sell the cars. They have imported four hybrids, including three Lexus LS600HL and one Lexus RX450H.

“The hybrid cars have had customs clearance for more than one month, but we still cannot sell them. What will happen if we have to pay additional tax?” one of the importer’s representatives complained.

Article No 7 of the Luxury Tax Law approved by the National Assembly on November 14, 2008 defines hybrid cars as those which use either electricity or biofuels in addition to petrol to run, reported one car dealer.

In cases where petrol volume use is not higher than 70 percent of the total fuel expended, the luxury tax rate will be 70 percent of the tax rate applied to a normal car of the same kind.

As such, a company must pay the tax of 42 percent, or 70 percent of the tax rate of 60 percent applied to normal cars of the same kind. VICT port customs cleared the four imported Lexus with a tax rate of 42 percent.

Customs agents warned, however, that the importer may have to pay additional tax if agencies later find out that the car model has a petrol volume use higher than 70 percent of the total fuel used.

As such, the problem is that the exact ratio of gasoline that these car models use has not been officially established.

The VRA replied to the importer on August 14 that it is very difficult to define the petrol and electricity level used by hybrid cars as there is no fixed level for all models of hybrids.


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