The Vietnamese Government has announced that import tax on spare parts and components used in the automotive industry may be removed next year under the Association of South East Asian Nations (ASEAN) free trade agreement, two years ahead of schedule.
According to a statement issued by the General Department of Taxation on November 20, by bringing forward these import tax cuts, which are scheduled to take place in 2018, the Government is hoping to support the local automotive industry. The Ministry of Finance is consulting other ministries on the proposals, the statement added.
The measures will affect automotive parts imported from the ASEAN countries, which, in addition to Vietnam, include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, and Thailand.
However, the tax department also announced that tax on vehicle engines imported from South Korea will be reduced to 3 percent from 20 percent next year, even though South Korea isn't a member of the ASEAN grouping. This is equal to the level of tariff cuts that Vietnam has committed to under its free trade agreement with Japan.
Additionally, tax on gearboxes and accessories used in trucks imported from South Korea and Japan will be cut to zero percent in 2016, instead of in 2018 and 2019, respectively, as originally planned. This matches Vietnam's commitment under the ASEAN agreement.
Import tax on auto parts from China will be cut to zero percent by 2018, the Department added.