The Government directed to reduce 50% of registration fees for domestic cars from July 1.

On June 7th, the Government Office issued a document announcing the directive of Deputy Prime Minister Le Minh Khai regarding a 50% reduction in vehicle registration fees for domestically produced and assembled automobiles.

Accordingly, the Deputy Prime Minister directed the Ministry of Finance to take the lead and coordinate with relevant agencies to urgently draft a Government Decree on the registration fee rate for domestically produced and assembled automobiles, similar to the two previous times (aiming to reduce the registration fee by 50% for domestically produced and assembled automobiles), and to apply it from July 1, 2023.

The Deputy Prime Minister agreed to proceed with the drafting of the Decree using a simplified procedure. He also requested that the Decree be submitted to the Government before June 15th.

Members of Parliament have proposed considering expanding the scope of those eligible for value-added tax reductions.

During a discussion in the National Assembly on June 1st, Representative Nguyen Thi Viet Nga (from Hai Duong province) proposed considering expanding the scope of goods eligible for value-added tax reduction, applying an 8% VAT rate (a 2% reduction) to automobiles, including those with fewer than 24 seats, in order to promote domestic automobile production and business.

Ms. Nga argued that while applying an 8% VAT rate would result in a 2% budget shortfall compared to current regulations, automobiles are a high-tax commodity, subject to numerous fees (VAT, import tax, special consumption tax, registration fee, license plate fee, etc.).

Therefore, if demand is stimulated, the revenue collected from various taxes and fees levied on a car will exceed the 2% tax reduction.

"According to calculations, for a mid-range car sold, a 2% reduction in VAT would result in a tax revenue reduction of 10-15 million VND for the state. However, businesses would contribute 200-300 million VND to the state budget (from taxes and fees)," Ms. Nga stated.

According to Ms. Nga, the implementation of tax and fee reduction policies in the automotive manufacturing and business sector has shown strong and positive impacts.

Specifically, during the period of reduced registration fees from July 2020 to December 2020, the number of cars sold increased by 77% compared to the first six months of 2020.

When the vehicle registration fee reduction was applied 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 was in place, as well as after the support ended .

Source: https://www.nguoiduatin.vn/chinh-phu-chi-dao-giam-50-phi-truoc-ba-voi-o-to-trong-nuoc-tu-1-7-a611623.html