Industrial products supporting the automobile assembly industry - Tax incentives for auto components

 

 

 

In recent years, the Vietnamese automobile industry has developed strongly, becoming one of the country's important industries. The development of the automobile industry not only helps meet the increasing demand of the domestic market but also opens up export opportunities to foreign markets. However, the Vietnamese automobile industry is still facing many challenges, including the limited production of components and spare parts domestically. Therefore, the development of supporting industries, especially enterprises producing components and spare parts for automobiles, is extremely urgent.

 

I. Potentials and opportunities of the automobile industry in Vietnam

 

In order to promote the development of the automobile industry, the Government has issued many preferential and supportive policies:

• Applying high import tax on complete automobiles (70-80%) to protect domestic production. Imported automobiles from ASEAN countries are also subject to tax of 30-50%.
• Automobile assembly enterprises enjoy a 10% corporate income tax incentive for 15 years and a 4-year tax exemption from the time of generating income. Newly established factories also receive a 50% reduction in land rent.
• Supporting human resource training and building infrastructure for automobile industrial clusters. The Government also encourages investment in the automobile supporting industry through preferential policies.
• Issuing standards on quality, technical safety and environmental protection to manage automobile assembly and production activities.

Thanks to the above policies, the Vietnamese automobile industry has attracted many FDI projects from large corporations such as Toyota, Honda, Ford, etc., contributing to the development of domestic production.

 

II. Tax policy on cars in Vietnam

 

Car taxes in Vietnam include:

• Special consumption tax: High for imported cars but lower for domestically produced and assembled cars. The purpose is to protect domestic production.
• Value added tax: Domestically produced and assembled cars are subject to 10% VAT, imported cars are subject to import tax and customs VAT.
• Environmental protection tax: Applied to gasoline, the collection rate is from 3,000 - 8,000 VND/liter depending on the type of gasoline.
• Registration fee: Calculated on the value of the car, the fee ranges from 10-12% depending on the locality.

In general, the high auto import tax policy has created favorable conditions for the development of domestic manufacturing and assembly industries. However, reasonable adjustments are needed to encourage investment in new technology and improve the competitiveness of Vietnamese enterprises.

 

 

 

 

See more articles: List of priority supporting industrial products for development

 

III. Industrial products supporting the automobile assembly industry

 

Despite many preferential policies, Vietnam's auto parts industry still faces many difficulties, specifically:

• Most Vietnamese auto parts and components manufacturing enterprises are small-scale and have outdated technology, so they cannot meet the strict requirements of auto manufacturers and assemblers.
• Lack of investment capital to innovate technology and improve production capacity. Logistics and input material costs are still high.
• Linking auto manufacturers with domestic parts suppliers is still limited.

To develop the auto parts industry, solutions are needed such as:

• Continuing to improve tax policies, creating favorable conditions for businesses to invest in upgrading technology and expanding production scale.
• Supporting businesses to access preferential capital sources to innovate equipment and technology.
• Strengthening cooperation and linkage between auto manufacturing and assembling enterprises and domestic parts and components suppliers.
• Training high quality human resources to meet the requirements of the automotive industry.

 

IV. Case study of Tam Viet tax client in the auto assembly component manufacturing industry receiving tax incentives

 

For the field of supporting industrial products in the automotive assembly components industry, Tam Viet Tax Company has helped submit documents for the customer, Getac Precision Technology Vietnam Co., Ltd. Address at Que Vo Industrial Park, Bac Ninh. Getac products are components such as seat belts for cars, drive shafts, car brakes, aluminum radiators, etc.

Within 45 days from the date of receiving complete documents on product description. Tam Viet has helped Getac Company receive a tax incentive certificate for supporting industrial products. Thereby helping businesses receive incentives to continue operating and expanding their business in the coming years. Not only completing the documents and receiving the certificate quickly. Getac's CEO is also very satisfied with our service from Tam Viet and has discussed introducing other partners who are member companies or friends who are foreign companies in Vietnam.

 

VI. Conclude

 

Vietnam's auto parts and accessories industry is still facing many difficulties, despite the preferential policies that have been applied. Enterprises producing auto parts and accessories are small-scale, have poor technology, high logistics and input material costs, and the linkage between auto manufacturers and domestic parts suppliers is not promoted.

To develop the auto parts and accessories industry, it is necessary to have support from the government and promotion solutions from businesses. Solutions such as perfecting tax policies, supporting investment capital, enhancing cooperation between auto manufacturing and assembling enterprises and domestic parts and accessories suppliers, along with training high-quality human resources will play an important role in increasing the added value and competitiveness of Vietnam's auto industry in the future.

The dossier confirming incentives for the Project on manufacturing industrial products supporting the auto parts manufacturing industry is an important and complicated process. This process requires SMEs to prepare complete and accurate documents as prescribed by the competent authority. Doing this will help ensure that the Project receives the expected incentives and contributes to the development of the supporting industry.

 

There are still many concerns of businesses regarding the product code that is eligible for incentives when submitting documents to the Ministry of Industry and Trade and many businesses also have problems not knowing whether their business meets the requirements to enjoy corporate income tax incentives or not? If you need advice, you can contact the experts of Tam Viet Tax!

We are confident with many years of experience helping dozens of Vietnamese and foreign businesses including Japan, Korea, Taiwan, China ... to enjoy tax incentives successfully and receive tax refunds in the shortest time. 100% of our customers are satisfied with Tam Viet Tax's services and are willing to introduce them to other partners.

 

Hotline for business consulting: 0914.383.998

Tam Viet Tax - accompanying businesses!