The Ministry of Finance has just sent an official dispatch to relevant ministries, branches and agencies asking for opinions on continuing to reduce registration fees for domestically manufactured and assembled cars from August 1, 2024 to January 31, 2025.

Despite the proposal to reduce registration fees for domestically produced and assembled cars, the Ministry of Finance still shares many concerns, including concerns about the impact on international commitments of which Vietnam is a member.

Accordingly, tax, fee and charge policies are currently applied uniformly between domestically produced goods and imported goods.

The implementation of a 50% reduction in registration fees for domestically produced and assembled cars is assessed to have an impact on the implementation of Vietnam's national treatment principle within the framework of the WTO and FTAs.

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The Ministry of Finance has proposed a 50% reduction in registration fees for domestically produced and assembled cars. Photo: Hoang Hiep.

The agency said: During the period of applying the policy of reducing registration fees for domestically produced and assembled cars according to Decree No. 70/2020, Decree No. 103/2021, Decree No. 41/2023, countries with interests in exporting cars to Vietnam have reflected that Vietnam has treated domestically produced cars unfairly with imported cars, violating the basic principles of the WTO. These partners have repeatedly proposed to meet with leaders of the Ministry of Finance to discuss this content.

At the same time, this policy was also mentioned by the WTO Secretariat during the second review of Vietnam's WTO trade policy in 2021.

According to the summary assessment of the Ministry of Foreign Affairs, the Ministry of Industry and Trade, and the Ministry of Planning and Investment, no country has filed a lawsuit against the application of the policy of reducing registration fees for domestically produced and assembled cars in Vietnam.

However, the Ministry of Finance said that recently, Vietnam has received many requests to explain the policy when there is a distinction applied between domestically produced and assembled cars and cars imported from countries without domestic production and assembly activities in Vietnam.

The Ministry of Finance said that Vietnam explained the reason for issuing this measure is to help domestic automobile manufacturers overcome difficulties, especially after the Covid-19 pandemic. This is a temporary measure, only implemented for 6 months and will expire in December 2023.

Vietnam also informed that since joining the WTO, Vietnam has never issued any similar policies, but this is an exceptional situation.

Regarding the continued extension of the policy of reducing registration fees for domestically produced and assembled cars, the Ministry of Finance frankly acknowledged that this measure is considered a violation of the commitments on goods between countries, not a dispute between an investor and a country. Accordingly, the possibility of complaints and lawsuits is possible but is considered not too stressful. The lawsuit is only aimed at ending the measures being applied.

In fact, when implementing the reduction of registration fees, Vietnam only received requests to explain the policy when there was a distinction applied between domestically produced and assembled cars and imported cars.

In addition, according to experts, reducing registration fees will inevitably help increase sales of gasoline and diesel vehicles in the country. However, this is likely to go against the proposed trend of "greening" means of transport.

This is also shown in the report "Vietnam Energy Outlook - Road to Net Zero Emissions" (EOR-NZ) recently released by the Electricity and Renewable Energy Authority (Ministry of Industry and Trade) in collaboration with the Danish Energy Agency and the Danish Embassy.

In this report, the researchers presented a scenario related to Green Transport. The report assessed: Major cities in Vietnam are facing alarmingly high levels of air pollution and have significant negative impacts on public health. The transport sector, along with other economic sectors, contributes significantly to this situation. Higher efficiency standards, fine dust filters and electrochemistry, among other solutions, can contribute to mitigating the above impacts.

Meanwhile, the Green Transport Strategy (Decision 876/QD-TTg, 2022) sets out key targets for developing the transport sector towards the goal of net zero emissions by 2050. These targets include increasing the proportion of transport modes using electricity and green energy, starting from 2025, as well as plans to shift transport demand to public modes in major cities.

The report’s key messages and recommendations are that Vietnam needs to rapidly electrify light-duty vehicles and use renewable fuels in heavy-duty transport segments to reduce its climate and environmental impacts in a cost-effective manner.

Economist Pham Chi Lan, when looking at the level of pollution in big cities like Hanoi and Ho Chi Minh City, also pointed out that part of the cause comes from traffic.

This expert also called for consensus in developing "green cars". "First of all, from the Government, why doesn't the Government set out a program for itself that by a certain year all public vehicles must be green, electric vehicles and no longer use other vehicles", Ms. Lan suggested.

The continuous reduction of registration fees for domestically produced and assembled gasoline vehicles in recent years is causing concern that it goes against the above recommendations.

Proposal to reduce 50% of registration fees for domestically assembled cars The Ministry of Finance proposes to reduce 50% of registration fees for domestically produced and assembled cars for 6 months, from August 1, 2024 to January 31, 2025.