Pickup trucks are gaining popularity in Vietnam due to their versatility and affordability. However, a proposed tax increase on pickup trucks by the Ministry of Industry and Trade could significantly raise their prices, potentially by hundreds of millions of VND. This would considerably impact the automotive market and consumers.
Comparison table of pickup truck prices before and after the tax increase (Source: vnexpress.net)
Comparison table of pickup truck prices before and after the tax increase (Source: vnexpress.net)
According to the proposal, the tax and fee rates applied to pickup trucks would no longer be preferential but would increase to be similar to passenger cars with fewer than 9 seats. Pickup trucks with 5 seats or less and a payload capacity of less than 1,500 kg (the majority of pickup trucks in Vietnam fall into this category) are considered passenger cars when participating in traffic. Therefore, their tax and fee rates should also be the same as passenger cars.
How Will Pickup Truck Taxes and Fees Change?
Currently, pickup trucks benefit from preferential treatment in three types of taxes and fees: import tax, special consumption tax (SCT), and registration fee. The proposed adjustments to tax and fee rates are as follows:
Current Tax and Fee Rates:
| Engine Displacement | Import Tax Rate | Special Consumption Tax | Registration Fee* |
|---|---|---|---|
| Under 2.5 liters | 5% | 15% | 2% |
| 2.5 – 3.0 liters | 5% | 20% | 2% |
| Over 3.0 liters | 5% | 25% | 2% |
Proposed Tax and Fee Rates:
| Engine Displacement | Import Tax Rate | Special Consumption Tax | Registration Fee |
|---|---|---|---|
| Under 1.5 liters | 30% | 40% | 10% |
| 1.5 – 2.0 liters | 30% | 45% | 10% |
| 2.0 – 2.5 liters | 30% | 50% | 10% |
| 2.5 – 3.0 liters | 30% | 55% | 10% |
| 3.0 – 4.0 liters | 30% | 90% | 10% |
| 4.0 – 5.0 liters | 30% | 110% | 10% |
*Hanoi applies a separate registration fee rate.
Pickup Truck Tax Increase: Prices Surge
The basic formula for calculating the on-road price of a pickup truck is: On-road Price = Base Price x (1 + %Import Tax) x (1 + %SCT) x (1 + %VAT) x (1 + %Registration Fee). VAT is fixed at 10%.
Example: The import cost price is 500 million VND for a 2.2-liter engine car.
- Current on-road price: 500 x (1+5%) x (1+15%) x (1+10%) x (1+2%) = 677 million VND.
- On-road price after adjustment: 500 x (1+30%) x (1+50%) x (1+10%) x (1+10%) = 1,180 million VND.
Thus, the price increase is 503 million VND, nearly double the original car price.
Formula for calculating on-road car price (Source: vnexpress.net)
Formula for calculating on-road car price (Source: vnexpress.net)
Impact of the Tax Increase
With the new tax and fee calculation method, pickup trucks will no longer be an “affordable” vehicle line. Many models will be priced above 1 billion VND, and even the highest-end version of the Ford Ranger could reach nearly 2 billion VND. At this price point, with the same number of seats as passenger cars, the chances of pickup trucks selling as well as they do now are very low.
Purpose of Increasing Pickup Truck Taxes
According to experts, increasing pickup truck taxes serves several purposes:
- Increasing state budget revenue and preventing losses compared to passenger cars.
- Limiting the rapid growth of pickup truck ownership.
- Acting as one of the first steps in the roadmap to protect domestically assembled vehicles.
Additionally, the Ministry of Industry and Trade has also proposed exempting SCT for the domestically produced value of a car model. For example, if a car has 60% domestic content, only the remaining 40% would be subject to SCT. This tax approach would make imported models relatively more expensive compared to domestically assembled cars.
Conclusion
The increase in pickup truck taxes will significantly impact the automotive market. Higher car prices may cause consumers to switch to other vehicle types. This proposal needs careful consideration to ensure a balance of interests for the State, businesses, and consumers.
(Source: Duc Huy – vnexpress.net)
