Vietnam's trade ministry now wants 150 percent tax on luxury cars

Thanh Nien News

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Vietnam plans to use tax measures to restrict the number of large and luxury cars. Photo: Phong Tran Vietnam plans to use tax measures to restrict the number of large and luxury cars. Photo: Phong Tran

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Only one month after the Ministry of Finance proposed increasing luxury taxes on cars with large engines to up to 75 percent, trade officials now say the maximum tax rate should be raised to 150 percent to restrict the use of expensive, fuel-hungry vehicles. 
Under its new proposal, the Ministry of Industry and Trade agrees that the tax on small cars should be cut from the current 45 percent to 25-40 percent.
But for cars with engines lager than three liters, it said taxes should be between 90 and 150 percent, depending on the size of the engine. 
The highest luxury tax Vietnam ever imposed on cars was 100 percent, between 1999 and 2003. The current maximum rate is 60 percent. 
This is not the first time the trade ministry has tried to bring back higher taxes. 
Earlier this year it received strong opposition from consumers and importers after proposing a tax rate of 195 percent on cars with engines larger than six liters.
Tax proposals are coming from different agencies, following an order by the prime minister to encourage the use of small cars and restrict big and luxury cars.
Luxury cars with engines of more than three liters now account for less than 3 percent of all personal cars in Vietnam and they are mostly imports from the US, Japan and Europe, news website Saigon Times Online reported, citing official figures.
Experts said that if Vietnam introduces very high tax rates, it may create difficulties for foreign products and competitive advantage for the the local automobile industry. That would go against World Trade Organization commitments, they said. 

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