Consider extending preferential tariff programme for automobile manufacturing domestically

Suggesting the Ministry of Industry and Trade to soon have a specific assessment of the results on the implementation of this programme, the Ministry of Finance gave the opinion that it should extend the programme, but it needs to change some points.

To encourage domestic automobile production, the Government has a Preferential Tariff Program

On November 16, 2017, the Government issued Decree 125/2017/ND/-CP (amending and supplementing articles of Decree 122/2016/ND-CP dated September 1, 2016 of the Government) in which supplementing the preferential tariff programme for automobile production and assembly.

Enterprises that meet the conditions set out in the programme are entitled to the preferential import tax rate of 0% for imported automobile parts that cannot be produced domestically.

On May 25, 2020, the Government issued Decree 57/2020/ND-CP (amending and supplementing Decree 122/2016/ND-CP and Decree 125/2017/ND-CP) in which amending and supplementing many contents of the Preferential Tariff Programme to meet new requirements.

There is still more than a year to end the programme (December 31, 2022), but with the specificity of the automobile industry, it takes 2-3 years to prepare for manufacturing new car models, the Association of Automobile Manufacturers (VAMA) and businesses, as well as localities, have proposed the Government decide whether to continue extending this programme or not.

At the same time, Deputy Prime Minister Le Van Thanh gave instructions (in Official Dispatch No. 4349/VPCP-KTTH dated June 30, 2021) that the Ministry of Finance chair the review to conduct an overall assessment of the implementation of the programme; research and propose contents to be amended and supplemented, including the possibility of continuing to extend the programme for the next period (after 2022).

There are 9 large-scale automobile manufacturing enterprises with sufficient production and business capacity participating in the Program. Illustrated photo by Nguyễn Hà

Regarding this issue, in the document sent to ministries, agencies and businesses (signed on July 13, 2021), the Ministry of Finance requested the Ministry of Industry and Trade and VAMA offer opinions and comments on the content of the draft decree amending Decree 57/2020/ND-CP. In particular, these agencies need to have a detailed assessment on the results of the implementation of the programme. This comment should be submitted by July 20, 2021.

Regarding to consideration for continuing to implementing the programme, in the draft, the Ministry of Finance said continued implementation is necessary. However, this authority also pointed out some amendments related to emission conditions, tax incentives review period, general output and minimum output.