US Carmakers Urge Vietnam To Reverse Auto Taxes

by Mary Swire, Tax-News.com, Hong Kong

13 October 2003

A group of America's 'big three' car makers, collectively known as the Automotive Trade Policy Council, is attempting to persuade the Vietnamese government to reverse recently introduced tax and tariff increases on locally assembled vehicles.

In a statement, the council which represents the interests of Ford, General Motors and Daimler Chrysler said: "These actions will lead to a strong contraction in auto sales and production, and not lead to the increased localisation or increased revenue the government is seeking."

Hanoi has stoked the anger of the automotive industry by proposing to increase tariffs on imported car components from 25% to 30% in a bid to encourage manufacture of parts within the country after rates increased by 5% only last month.

The proposal has led to warnings from the industry that Vietnam's fledgling but fast growing automotive sector could be witness to firms pulling out of the country if the tax hikes go ahead, especially in the light of recent increases in sales tax and registration fees.

According to Reuters, as buyers rushed to beat the tax increases this year, car sales leapt nearly 40% in the first eight months of 2003, to reach a total of 22,181.

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