The Ministry of Finance proposed to continue extending the Automobile Support Industry Tax Incentive Program until December 31, 2027, contributing to improving the production capacity and localization rate of the automobile industry.
The Ministry of Finance is seeking comments on the draft Decree amending and supplementing Article 9 of Decree 26/2023/ND-CP on export tax schedules, preferential import tax schedules, list of goods and absolute tax rates, mixed tax rates, and import tax rates outside tariff quotas.
Average tax refund of 39 billion VND/year
Implementing the policy on developing the supporting industry , on May 25, 2020, the Government issued Decree 57/2020/ND-CP, which added the Automobile Supporting Industry Tax Incentive Program (now Article 9 of Decree 26/2023/ND-CP). The program implementation period is until December 31, 2024.
According to the Ministry of Industry and Trade, there are currently about 410 enterprises manufacturing automobile support industry products with 1,229 automobile support industry products manufactured.
Tax incentives in general and the Automobile Supporting Industry Tax Incentive Program in particular have played an important role in promoting the development of the automobile industry in recent years.
The domestic automobile market is growing well, production scale is constantly expanding, especially some domestically produced and assembled electric vehicle lines are growing rapidly…
According to the assessment of the Vietnam Association of Mechanical Enterprises (VAMI), member enterprises have recognized certain effectiveness that the program has brought through the application of a preferential import tax rate of 0% for raw materials, supplies, and components for manufacturing and assembling supporting industrial products.
According to the General Department of Customs (Ministry of Finance), out of 410 enterprises manufacturing automobile supporting industry products, there are currently 17 enterprises registered to participate in the Automobile Supporting Industry Tax Incentive Program at 6 provincial and municipal customs departments: Bac Ninh , Hanoi , Hai Phong , Quang Nam , Ha Nam Ninh, Binh Phuoc . The General Department of Customs has implemented 7 incentive periods.
As of May 31, 2024, enterprises participating in the program have produced more than 3.3 million products, with a tax refund of VND 116.8 billion. The tax refunds in 2021 – 2023 and the first 5 months of 2024 are: VND 2.44 billion; VND 66.56 billion; VND 36.98 billion; VND 10.86 billion, respectively. The average tax refund is about VND 39 billion/year.
Proposal to extend policy until 2027
Based on the results achieved by the Automobile Support Industry Tax Incentive Program, units such as the Ministry of Industry and Trade, VAMI, and the Vietnam Automobile Manufacturers Association (VAMA) all proposed to continue extending the program.
VAMA and VAMI proposed an extension until December 31, 2027 to ensure the same duration as the Tax Incentive Program for automobile production and assembly.
According to the Ministry of Finance, the implementation of tax incentives for the automobile manufacturing and assembly industry, including tax incentives for supporting industries, shows that these policies have truly contributed to the development of the domestic automobile manufacturing and assembly industry.
This policy has contributed to encouraging businesses to continue investing, expanding production and assembling cars instead of importing complete cars from ASEAN with a 0% import tax rate, thereby creating a driving force that spreads to consumers and businesses producing auxiliary products for the auto industry such as repair, warranty, maintenance, etc.
At the same time, it also creates important infrastructure in the development of electric car manufacturing and assembly industry (such as Vinfast, TMT Company).
The Ministry of Finance reports to the Government for decision on continuing to extend the automobile supporting industry tax incentive program for a period equivalent to the tax incentive program for automobile production and assembly (until December 31, 2027) to ensure consistency and unity in support policies and contribute to improving the production capacity and localization rate of the automobile industry.