Proposal to extend the special consumption tax payment deadline for domestically produced and assembled cars

Manufacturing activities at Hyundai Thanh Cong Company. Photo: Hồng Nụ

The Ministry of Finance has just submitted a draft to the Government on a draft decree to extend the special consumption tax payment deadline for domestically produced or assembled cars.

Accordingly, the Ministry of Finance proposed to postpone the deadline for payment of special consumption tax for the tax periods of June, July, August and September of 2024 to November 20, 2024 at the latest.

The Ministry of Finance said that, implementing Decree No. 36/2023/ND-CP dated June 21, 2023 on extending special consumption tax, until May 2, 2024, the total number of businesses requesting to extend special consumption tax are 14 units with a total amount of excise tax extended according to the declaration of VND 8,082 billion.

Regarding the amount of special consumption tax paid in the first three months of 2024 of 12 domestic automobile manufacturing and assembling enterprises, the Ministry of Finance said the total amount of special consumption tax payable is VND 5,186 billion. The amount of tax paid is VND 5,043 billion, the total amount of tax remaining to be paid is VND 142 billion.

According to the Ministry of Finance, in recent years, production and business activities of enterprises have still encountered many difficulties, affecting domestic economic and social development goals. In the context of economic recession, the automobile manufacturing and assembly industry also faces a decline in sales and adjusts output.

In the first free months of this year alone, the average consumption of domestically produced and assembled vehicles was 14,160 vehicles/month (January was 12,842 vehicles, February was 11,261 vehicles and March was 18,388 vehicles). It is forecast that in 2024, the auto market in particular and the entire economy in general will continue to face other negative impacts due to the economic crisis and global geopolitical conflicts.

It is predicted that in 2024, the automobile market in particular and the entire Vietnamese economy in general will have to cope with other negative impacts due to the economic crisis and global geopolitical conflicts, especially becoming more stressed since the pandemic.

Due to the above difficulties and challenges, the Ministry of Finance proposes to extend tax payment for payable special consumption tax arising in the tax periods of June, July, August and September of 2024 for cars manufactured or assembled domestically. The extension period is from the end of the special consumption tax payment deadline according to regulations until November 20, 2024. The Ministry of Finance proposes to implement the extension following a plan similar to Decree No. 36/2023/ND-CP.

The proposal to extend until November 20 is to avoid accumulating amounts payable to businesses at the end of the year and avoid affecting the completion of state budget revenue estimates in case businesses encounter financial difficulties.

Assessing the impact of the policy on the state budget, the Ministry of Finance said that the expected monthly average amount of special consumption tax on domestically produced and assembled cars in the following months of 2024 is about VND2,140 billion.

Accordingly, the total amount of special consumption tax on domestically produced and assembled cars extended for four tax periods as proposed is about VND 8,560 billion.

Regarding the impact on implementing international commitments, the Ministry of Finance believes that extending the special consumption tax payment deadline for domestic automobile manufacturing and assembling enterprises is not a tax incentive solution and does not violate the regulations on subsidies, so there is little concern from car importers.

Extending the tax payment deadline will facilitate domestic manufacturing and assembly enterprises compared to foreign enterprises.

The Ministry of Finance said that after 4 years of implementing this solution, the Ministry of Finance has not recorded any cases of reaction. If a reaction arises, the Ministry of Finance will request the Government to assign the Ministry of Industry and Trade to coordinate with the Ministry of Foreign Affairs to take appropriate response measures.

Regarding the procedural order, taxpayers eligible for the extension only need to send the request electronically, either directly to the tax authority or by mail to the tax authority once. All periods are extended simultaneously as submitting the special consumption tax declaration according to regulations.

The Ministry of Finance proposed to allow the decree to be issued and take effect from the date of signing until December 31, 2024 because it is an urgent solution that needs to be issued immediately.