Vietnam ministry wants to slash taxes for "diplomatic' cars

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A diplomatic car parked on a Ho Chi Minh City street. The Ministry of Finance wants to slash the tax locals who buy cars from foreign diplomats must pay in order to register the cars in their own name. FILE PHOTO

The Ministry of Finance is seeking government approval to reduce the tax burden on locals who have bought cars from diplomats to encourage them to register the cars in their own names.

Last April, the Ministry of Public Security said local owners of cars with diplomatic license plates had to complete ownership transfer procedures by June 10.

However, as of August 15, the new owners of only 126 of the 1,200 diplomatic cars that have been sold to locals had attempted to obtain civilian license plates.

In order to do so, a new owner must pay taxes that are equal to, or even higher than, the cost of the car itself.

N.V.T. of Hanoi told Tuoi Tre (Youth) newspaper he has left his car unused at home for more than two months now, and has yet to register it in his name.

T. said that because the Finance Ministry requires that the tax must be calculated from the moment the car was transferred to him, he owes more than VND1.4 billion (US$66,272) on the Mercedes Benz he bought in 2004. The car's value, however, is currently just VND500 million ($23,668).

"I'd rather not use it or give it to the government, and use that money to buy another car," he said.

Do Hoang Anh Tuan, deputy minister of finance, said the ministry will call on the government to apply a new tax rate to give car owners more incentives to carry out the procedures.

Tuan said if the proposal is approved, those who have already paid the high tax would receive refunds to ensure fairness.

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According to government figures, around 4,000 cars had been imported into Vietnam by 2009 for use by diplomats.

Foreigners and diplomats are allowed to import cars tax-free for personal use, and are respectively issued license plates marked NN (black) and NG (red).

When their tenure ends the owners have to take the cars out of Vietnam or sell them to locals, who in turn must to pay the taxes and fees that were originally waived, in order to obtain civilian plates.

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