Creating momentum for automotive industry growth.

The Ministry of Finance has proposed extending the tax incentive program for automotive supporting industries until December 31, 2027.

Extending the program is a necessary solution.

The Ministry of Finance is seeking feedback on a draft Decree aimed at adjusting tax rates, product categories, and related taxes on import and export activities as stipulated in Article 9 of Decree 26/2023/ND-CP. In particular, the Ministry proposes extending the tax incentive program for automotive supporting industries until December 31, 2027.

Extending the program until 2027 is not merely a preferential policy, but also a strong commitment from the Government to support businesses in building a modern, self-reliant, and sustainable automotive industry. Photo: VinFast

This proposal not only ensures consistency in incentive policies but also creates opportunities for the Vietnamese automotive industry to move closer to its goal of modernization and deep integration into the global value chain.

According to the Ministry of Finance, extending the program is a necessary solution to realize the country's industrialization and modernization strategy as directed by the Party and Government . This policy not only supports domestic businesses in expanding automobile production and assembly but also reduces dependence on importing complete automobiles from ASEAN with a 0% tariff rate.

A highlight of the program is its positive ripple effect on supporting industries, including component manufacturing, warranty and maintenance services, and especially the infrastructure for electric vehicle development – ​​a sector that is gradually establishing its position with prominent names such as VinFast and TMT Company.

To ensure consistency, the Ministry of Finance proposes extending this program for a period equivalent to other tax incentives in the automotive manufacturing and assembly sector. This will contribute to creating a solid foundation for the domestic automotive industry to break through, both in terms of production capacity and localization rate.

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Evaluating the Automotive Supporting Industry Tax Incentive Program over the past period, the Department of Industry (Ministry of Industry and Trade) stated that tax incentive policies in general and the Automotive Supporting Industry Tax Incentive Program in particular have played an important role in promoting the development of the automotive industry in recent years.

The domestic automotive market is experiencing strong growth, with production scale continuously expanding. In particular, some domestically produced and assembled vehicle models are experiencing rapid growth. The localization rate for some commercial vehicle models is relatively high, and several automotive products and components have been exported to many regional and global markets. Simultaneously, several strong domestic automotive brands have been established, attracting investment and expanding production in the automotive industry.

Since the implementation of the Automotive Supporting Industry Tax Incentive Program, according to the Vietnam Association of Mechanical Engineering (VAMI), member businesses have noted certain benefits brought about by the program through the application of a preferential import tax rate of 0% on raw materials, supplies, and components for the production and assembly of supporting industrial products.

VAMI believes that this provides a solid foundation for businesses to confidently stabilize production and operations, expand production scale, invest in new machinery and equipment, modern technology, improve productivity, participate deeply in the global automotive industry value chain, and gradually affirm the development of the domestic automotive supporting industry.

According to the Ministry of Industry and Trade, currently, there are 38 enterprises that meet the requirements for manufacturing and assembling automobiles as stipulated in Government Decree No. 116/2017/ND-CP dated October 17, 2017, and approximately 410 enterprises producing automotive supporting industrial products, with 1,229 automotive supporting industrial products already manufactured.

From 2020 to the present, the Ministry of Industry and Trade has granted incentive certificates to approximately 40 projects producing supporting industrial products for the automotive manufacturing and assembly industry, which are included in the list of priority supporting industrial products for development. “ This provides a basis for businesses to continue working with competent authorities to be considered for incentives as stipulated by law. Tax incentives are an important leverage, helping businesses confidently expand their scale, improve equipment, and gradually participate more deeply in the global value chain of the automotive industry, ” a VAMI representative shared.

Building a modern, self-reliant, and sustainable automotive industry.

The proposal by the Ministry of Finance and the Ministry of Industry and Trade to extend the incentive program until the end of 2027 creates favorable conditions for the continued development of this sector, contributing to enhancing the competitiveness of Vietnam's automotive industry.

According to the draft amendment, by December 31, 2027, raw materials, supplies, and components that cannot be produced domestically, and which directly serve the production and assembly of priority supporting industrial products for the automotive industry, will enjoy a preferential import tax rate of 0%.

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Before the 0% import tax preferential policy came into effect, customs declarants would declare and calculate taxes on imported raw materials, supplies, and components according to current tax rates, including normal, preferential, or special preferential rates.

After the policy is implemented, to benefit from the 0% import tax rate specifically for the automotive supporting industry, customs declarants need to fully meet the conditions and procedures as stipulated.

Extending the program until 2027 is not merely a preferential policy, but also a strong commitment from the Government to support businesses in building a modern, self-reliant, and sustainable automotive industry.

The positive results of the program will continue to provide impetus for the Vietnamese automotive industry to assert its position, not only domestically but also on the global industrial map.

Source: https://congthuong.vn/de-xuat-keo-dai-uu-dai-thue-cong-nghiep-ho-tro-o-to-tao-luc-day-cho-nganh-o-to-tang-truong-363592.html