50% discount on auto registration fee and import duty rates of 0% for automobile components in the pandemic

June 8th, 2020|

Recently, on May 29, 2020, the Government has promulgated Resolution No.84/NQ-CP on missions, solutions to continuously remove the difficulties in production and business in the context of the Covid-19 epidemic. Accordingly, the auto registration fee for domestically manufactured and assembled cars shall be cut by 50% until the end of 2020 in order to stimulate domestic consumption.

In fact, on May 25, 2020, the Government has issued Decree No.57/2020/ND-CP (“Decree 57/2020”) amending and supplementing Decree 122/2016/ND-CP on preferential import duty on raw materials, supplies and components for manufacturing and processing (assembly) of industrial support products prioritised the development of automobile manufacturing and assembly industry from 2020 to 2024 (hereinafter referred to as the “Tax Incentive Programme for automobile support industry”), namely:

  1. Applying 0% import duty on domestically unavailable raw materials, supplies and components for manufacturing and processing (assembling) of industrial support products prioritised  the development of the automobile manufacturing and assembly industry (hereinafter referred to as the “automobile support products”);
  2. The grounds of identification of domestically unavailable raw materials, supplies and components shall comply with Ministry of Planning and Investment’s regulations.
  3. Subjects of application includes:
    • Automobile component manufacturing and processing (assembly) enterprises must meet the following conditions:
      • Having the sales contracts of automobile support products with automobile manufacturing and assembly enterprises certified by the Ministry of Industry and Trade;
      • Having investment registration certificate or enterprise registration certificate stating their project objectives or business lines to include the manufacturing of components and auxiliary parts for automobile or other motor vehicles;
      • Having ownership or right to use the manufacturing and processing facilities; their equipment and machinery within Vietnam territory.
    • Automobile manufacturing and assembly enterprises, who manufacture and process automobile components and spare parts, needs a certificate of eligibility for automobile manufacturing and assembly issued by the Ministry of Industry and Trade.

Enterprises, who meet the above regulations, shall prepare the registration application to participate in the Tax Incentive Programme for automobile support industry. According to their satisfaction of the set out conditions prescribed under Decree 57/2020 and the actual examination results, the custom authority shall consider to decide whether such enterprise shall be refunded their overpaid tax. The consideration for application of the preferential import duty rates of 0% shall be conducted within the review periods for tax incentives, which must not exceed 6 months from January 01 to June 30 or from July 01 to December 31 each year.

Decree 57/2020 shall take effect from the 10 July, 2020.

We recommend that the automobile component manufacturing and processing (assembly) enterprises should consult for legal advisory and/or professional tax service to assess your capability to take part in the Tax Incentive Programme for automobile support industry and take advice on the procedures and required applications.