VietNamNet Bridge – Auto importers have petitioned the Prime Minister to delay a new Government decree on special consumption tax on automobiles, saying they need time to cope with any impact.

A model stands next to a BMW 740Li car Euro Auto introduced last Friday. Auto importers have petitioned the Prime Minister to postpone a new decree of the Government on special consumption tax on cars – Photo: Quoc Hung

Decree 108/2015/ND-CP guiding the implementation of the special consumption tax law is scheduled to take effect early next year, but auto importing firms have proposed delaying its implementation by six months.

The decree, which was issued late last month, should be made compatible with the law on special consumption tax that the National Assembly (NA) is revising.

In the petition, eight importers said Decree 108 might be replaced if the legislature approves the new law. This revised law is scheduled to come into force on January 1 next year.

According to auto importers, the method for special consumption tax calculation in the draft of the law is different from that provided by Decree 108.

Under Decree 108, special consumption tax would be calculated based on prices of imported autos, including import tax, and would go up by at least 5% compared to the current level. Meanwhile, the draft law the NA is discussing would regulate special consumption tax on selling prices quoted by retailers and the rise would not be lower than 7%.

Nguyen Dang Thao, chief executive officer of Euro Auto, said the two special consumption tax calculation methods for imported autos are different.

Thao estimated that selling prices of imported autos would be around 10% higher under Decree 108 and 20% or over under the draft law.

Auto importers bemoaned regular tax regulation revisions make it hard for them to observe tax regulations and adjust their business plans accordingly.

Auto importers claimed that they are now in trouble as they have already taken orders for delivery next year and that what would happen if the new special consumption tax takes effect early next year. It often takes three or four months to fulfill an order.

Thao said new orders for BMW cars could not be translated into reality until next May. Therefore, with the new special consumption tax calculation, the company could incur losses, he told the Daily at the launch of BMW 740Li last week.

Like other auto importers, Euro Auto was shocked by the prompt introduction of a new special consumption tax policy, which will become effective just two months after it was issued.

Auto importers also warned that ad hoc tax policy change would badly affect the business environment in Vietnam.

Auto importers suggested that if the special consumption tax law is revised and approved by the legislative body, the enforcement date of Decree 108 should be postponed until July 1, 2016.

They requested the Ministry of Finance to collect and take into account comments by auto importers and carmakers before adopting new methods for special consumption tax calculation.