Creating momentum for the auto industry to grow

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

Program extension is a necessary solution

The Ministry of Finance is seeking comments on the draft Decree to adjust tax rates, commodity lists and taxes related to import-export activities in Article 9 of Decree 26/2023/ND-CP. In particular, the management agency proposes to extend the tax incentive program for automobile supporting industries until December 31, 2027.

The extension of the program until 2027 is not only a preferential policy, but also a strong commitment from the Government to accompany businesses, building a modern, self-reliant and sustainable automobile industry. Photo: VinFast

This proposal not only ensures consistency in incentive policies but also creates opportunities for the Vietnamese automobile industry to move closer to the 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 strategy of industrialization and modernization of the country according to the direction of the Party and the Government . This policy not only supports domestic enterprises to expand production and assembly of automobiles but also reduces dependence on imported complete automobiles from ASEAN with a 0% tax rate.

The highlight of the program is the positive spread to supporting industries, including component manufacturing, warranty, maintenance and especially electric car development infrastructure - a field that is gradually asserting its position with typical names such as VinFast and TMT Company.

To ensure consistency, the Ministry of Finance proposes that the extension period of this program be equivalent to other tax incentives in the automobile manufacturing and assembly sector. This will contribute to creating a solid foundation for the domestic automobile industry to make a breakthrough, both in terms of production capacity and localization rate.

Evaluating the recent automobile support industry tax incentive program, the Department of Industry (Ministry of Industry and Trade) said that tax incentive policies in general and the automobile support 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 has grown well, the production scale has been constantly expanding, in particular, some domestically produced and assembled electric vehicles have grown rapidly. The localization rate of some commercial vehicles is relatively high, and a number of automobile products and auto parts have been exported to many regional and international markets. At the same time, a number of strong domestic automobile brands have been formed; attracting investment and expanding production in the automobile industry.

Since the issuance of the Automobile Supporting Industry Tax Incentive Program, according to the assessment of the Vietnam Mechanical Engineering Association (VAMI), member enterprises have recognized certain effectiveness that the program brings through the application of a preferential import tax rate of 0% for raw materials, supplies, components for manufacturing and assembling supporting industry products.

VAMI believes that this is the basis for businesses to feel secure in stabilizing production and business, expanding production scale, investing in new machinery and equipment, modern technology, improving productivity, participating deeply in the value chain of the world's automobile industry, and gradually affirming the development of the domestic automobile support industry.

According to the Ministry of Industry and Trade, currently, there are 38 enterprises qualified to manufacture and assemble automobiles according to the provisions of Decree No. 116/2017/ND-CP dated October 17, 2017 of the Government and there are about 410 enterprises manufacturing automobile supporting industry products with 1,229 automobile supporting industry products manufactured.

From 2020 to now, the Ministry of Industry and Trade has granted Certificates of Incentives to about 40 projects producing supporting industrial products for the automobile manufacturing and assembly industry in the List of priority supporting industrial products for development. " This is the basis for businesses to continue working with competent authorities to be considered for incentives according to the provisions of law. Tax incentives are an important lever, helping businesses feel secure in expanding their scale, improving equipment, and gradually participating deeply in the global value chain of the automobile industry, " said a representative of VAMI.

Building a modern, self-reliant and sustainable automobile 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 will create favorable conditions for the industry to continue developing, contributing to improving the competitiveness of the Vietnamese automobile industry.

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

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

After the policy is applied, to enjoy the 0% import tax incentive exclusively for the auto support industry, customs declarants need to fully meet the conditions and procedures as prescribed.

The program extension until 2027 is not only a preferential policy, but also a strong commitment from the Government to accompany businesses, building a modern, self-reliant and sustainable automobile industry.

The results that the program brings will continue to motivate the Vietnamese automobile industry to affirm 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