VN ministry proposes new tax on pickups

VIETNAM’S Ministry of Finance has proposed that the government apply a special consumption tax on pickups to be set at 60 percent of the tax on cars with nine seats or less with similar engine displacement, a move that would sharply increase their cost.

Speaking at a press conference in Hanoi yesterday, Pham Dinh Thi, head of the Finance Ministry’s Tax Policy Department, said pickups mainly have engine displacement of between 2,000cc and 3,000cc, so if the tax on a car with nine seats and less is currently 55 percent of the car value, the tax on pickups should be 33 percent.

The proposal was made after the prime minister required the ministry to study and check the tax on pickups in the region. The ministry found that regional countries usually levy special consumption tax on pickups lower than that of autos with nine seats or less.

According to the Law on Special Consumption Tax regulations, a special consumption tax of 15 percent is levied on pickup trucks with engine displacement of 2,500cc or less, 20 percent for those with over 2,500cc-3,000cc and 25 percent for those with over 3,000cc.

In recent years, the number of pickups has sharply increased in Vietnam, the majority imported. In 2012, 3,291 units were sold, of which 3,252 were imported and 39 units were locally-assembled. In 2016, sales soared to 28,233 units, of which 27,265 units were imported and 968 units were locally assembled.

Thi said the five-seat pickups had for many years enjoyed special consumption tax lower than that of vehicles with the same number of seats (lower than SUV models, with engine displacement from over 2,500cc to 3,000cc, taxed 55 percent). Therefore, the number of consumers moving to buy pickups instead of SUVs has been seen increasing rapidly.

On April 14, the Government Office announced that Deputy Prime Minister Trinh Dinh Dung had assigned the Finance Ministry to study and re-evaluate the current special consumption tax and registration fees for pickups, which then would be proposed and reported to the government and the National Assembly to supplement and revise law if needed.

If the Finance Ministry’s proposal is approved by the government and the National Assembly, the average special consumption tax on pickups will increase by 50 to 100 percent.