The Ministry of Finance has just submitted to the Government a draft Decree amending and supplementing a number of articles of Decree No. 26/2023/ND-CP of the Government on Export Tariff Schedule, Preferential Import Tariff Schedule, List of goods and absolute tax rates, mixed tax, and import tax outside the tariff quota.
In this Report, the Ministry of Finance does not support the proposal to reduce the output conditions of the Tax Incentive Program for automobile production and assembly. Previously, the Vietnam Automobile Manufacturers Association (VAMA) and the People's Committee of Hai Duong province requested to consider the proposal of Ford Vietnam Company Limited to adjust the output of the Tax Incentive Program in 2023.
The conditions for participating in the Tax Incentive Program and being eligible for the MFN tax rate (preferential export tax and import tax rate) of 0% for imported components and spare parts for automobile production and assembly are that automobile manufacturing and assembly enterprises must have a Certificate of eligibility for automobile production and assembly issued by the Ministry of Industry and Trade and meet the conditions prescribed in the Decree (including conditions on components; conditions on vehicle models; conditions on output; conditions on emissions; conditions on incentive consideration periods; conditions on documents and procedures).
In particular, enterprises must meet the output conditions (including the minimum overall output for all vehicle types and the minimum individual output for each vehicle model) as prescribed for each vehicle group. The regulation on output conditions is to encourage enterprises to invest and expand production scale. Enterprises will not be entitled to the preferential policies of the Program if they do not meet the output conditions during the tax incentive consideration period (6 months or 12 months).
"Production conditions are important and prerequisite conditions for enterprises to invest capital, expand production, and increase the localization rate, thereby contributing to bringing the automobile industry in line with the orientation and policies of the Party and State," the Ministry of Finance affirmed.
The Ministry of Finance said that the Government has recently had many policies to support the domestic automobile manufacturing and assembly industry, and VAMA's continued proposal to reduce production is not suitable for the current situation.
Regarding the proposal to add some spare parts and components to the List of Group 98.49 to apply the MFN tax rate of 0% of Toyota Vietnam Automobile Company, the Ministry of Finance also disagreed.
According to this agency, the items in group 98.49 of the List of regulated items are basically items that cannot be produced domestically and have high scientific and technological content and complex manufacturing to promote the development of the domestic automobile industry and reduce production costs.
Regarding the spare parts and components that Toyota Company proposed to add to the List of Group 98.49, the Ministry of Finance said that there are some HS codes proposed by Toyota Vietnam Automobile Company that have domestically produced products. Some HS codes proposed by Toyota Vietnam Automobile Company have been included in Group 98.49. Because the Company only provided HS codes, without specific descriptions of the goods, the Ministry of Finance has no basis to specifically consider the Company's proposal.
For raw materials, supplies, consumables or electronic components of automobiles (tubes, screws, bolts, brackets, frames, accessories made of iron, steel or basic metals...), the Ministry of Finance proposes not to include the content of this group in group 98.49 to be subject to import tax rates under the Tax Incentive Program.
The reason is that these are basic items that can be produced domestically, so there needs to be a policy to protect domestic production; at the same time, it is difficult to determine the quantity of items used in the production and assembly of cars to serve as a basis for applying preferential tax rates.
"Thus, the items that Toyota Company proposed are mostly domestically produced items, along with the fact that the list of group 98.49 has been revised many times and is basically consistent with reality. Accordingly, the Ministry of Finance submitted to the Government not to add more spare parts and components to the list of group 98.49 to apply the MFN tax rate of 0% as proposed by Toyota Company," the Ministry of Finance stated its opinion.
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