Reducing registration fees for domestically produced cars could save the budget 867 billion VND per month.

To contribute to stimulating consumption, providing financial support to people and businesses, and creating momentum for the recovery of growth in the domestic automobile manufacturing and assembly industry amidst the challenging economic context, the Ministry of Finance believes that continuing to reduce the vehicle registration tax rate for domestically produced and assembled automobiles is one of the necessary solutions.

Following the Government 's directive, the Ministry of Finance is submitting to the Government a proposal to further reduce the land use tax rate by 50% from the effective date of this Decree until January 31, 2025. From February 1, 2025 onwards, the land use tax rate will continue to be implemented according to the regulations in Government Decree No. 10/2022/ND-CP dated January 15, 2022.

The Ministry of Finance proposes reducing registration fees for domestically produced cars, potentially saving the budget 867 billion VND per month. (Photo: Ministry of Finance)

Assessing the impact on state budget revenue, according to calculations by the Ministry of Finance, at the time of 2020 and 2022, the decrease in state budget revenue from land use tax was approximately 5,238 billion VND, while the increase in state budget revenue from special consumption tax and value-added tax was approximately 5,200 billion VND.

Besides continuing the policy of reducing the vehicle registration tax by 50% for domestically produced and assembled cars in the current period, the increase in excise tax and value-added tax may not be enough to offset the reduction in the vehicle registration tax. It is estimated that the 50% reduction in the vehicle registration tax for domestically produced and assembled cars could reduce the average monthly state budget revenue from vehicle registration tax by approximately 867 billion VND (equivalent to the reduction stipulated in Decree No. 41/2023/ND-CP).

Furthermore, a 50% reduction in the vehicle registration tax for domestically produced and assembled automobiles could impact the balance of state budget revenue in localities. According to the Law on State Budget, vehicle registration tax revenue belongs to the local budget. A 50% reduction in the vehicle registration tax for domestically produced and assembled automobiles is likely to increase the number of cars sold and registered, potentially leading to an increase in revenue from vehicle registration tax, special consumption tax, and value-added tax.

However, actual revenue from excise tax and value-added tax is concentrated in only 8 localities where domestic automobile manufacturing and assembly companies are located, while other localities have experienced a decrease in local budget revenue due to this policy. Therefore, localities have requested central government funding to compensate for this revenue shortfall to ensure a balanced local budget.

Source: https://www.congluan.vn/giam-phi-truoc-ba-doi-voi-o-to-san-xuat-trong-nuoc-ngan-sach-co-the-giam-867-ty-dong-thang-post300775.html