The Government has directed a 50% reduction in registration fees for domestic cars from July 1.

On June 7, the Government Office issued an official dispatch announcing Deputy Prime Minister Le Minh Khai's direction on reducing 50% of registration fees for domestically produced and assembled cars.

Accordingly, the Deputy Prime Minister directed the Ministry of Finance to preside over and coordinate with relevant agencies to urgently develop a draft Decree of the Government on the registration fee for domestically manufactured and assembled cars as in the previous two times (in the direction of reducing the registration fee by 50% for domestically manufactured and assembled cars) and apply from July 1, 2023.

The Deputy Prime Minister agreed to develop the Decree following a simplified procedure. At the same time, he requested that the Decree be submitted to the Government before June 15.

Finance - Banking - The Government directs a 50% reduction in registration fees for domestic cars from July 1 — National Assembly delegates proposed considering expanding the scope of subjects eligible for value added tax reduction.

Discussing at the National Assembly on June 1, delegate Nguyen Thi Viet Nga (Hai Duong delegation) proposed considering expanding the scope of subjects eligible for value added tax reduction, applying an 8% VAT rate (2% reduction) to automobiles, including vehicles with less than 24 seats to promote domestic automobile production and trading.

Ms. Nga said that although applying the 8% VAT rate would cause a 2% budget deficit compared to current regulations, cars are a type of commodity subject to high taxes, along with many types of fees (VAT, import tax, special consumption tax, registration fee, license plate fee, etc.).

Therefore, if demand is stimulated, the amount of money collected from other taxes and fees on a car will exceed the 2% tax reduction.

"According to calculations, if the VAT is reduced by 2% for a mid-range car sold, the government will reduce tax revenue by 10-15 million VND. However, businesses will contribute 200-300 million VND to the state budget (from taxes and fees)," said Ms. Nga.

According to Ms. Nga, the stages of applying tax and fee reduction policies in the automobile manufacturing and trading sector have shown positive and strong impacts.

Specifically, during the registration fee reduction support period from July 2020 to December 2020, the number of cars sold increased by 77% compared to the first 6 months of 2020.

When applying the registration fee reduction from December 2021 to May 2022, the number of cars sold increased by an average of 10 - 20% compared to the months before the support, as well as after the end of the support .

Source