Vietnam will increase import taxes on used cars with large engines next month, a move that industry insiders said could more than double car prices.
Starting August 15, used cars with engines of 1.5 liters or more will, for the first time, be subject to the same tax rates as new cars of the same models. Then an additional US$5,000 or $15,000 tax will be imposed on the cars, depending on their engine capacity, news website VnExpress reported, citing a directive signed by Prime Minister Nguyen Tan Dung last week.
The import duty of between 77 and 83 percent on new cars remains unchanged. Currently, used cars are only subject to a fixed tax, starting at $3,500 per car.
According to the new directive, the tax rates on used cars will be flexible and adjusted by the Ministry of Finance in accordance with World Trade Organization regulations.
The VnExpress report cited car traders as saying that the higher taxes would be a severe blow for them because the prices of used cars would surge two to three times the current prices.
A car importer in Hanoi said after the government restricted the import of new cars, many traders planned to switch to used car trading. However, this was no longer a viable option now.
A new rule which came into effect June 26 stipulates that importers of cars with less than nine seats have to show proof that they are authorized dealers for the foreign carmakers. The documents have to be notarized by Vietnamese diplomatic representatives in the country of origin.