MoF develops excise tax policy to promote electric vehicle production

The Ministry of Finance believes that it is necessary to have tax incentives to encourage the production of environmentally friendly cars.

The current Law on Excise Tax stipulates that “Car running on both gasoline and electricity or bioenergy, the proportion of gasoline that does not exceed 70% of the total energy used, will apply excise tax rate equal to 70% of the tax rate applicable to vehicles of the same type specified at Points 4a, 4b, 4c and 4d of the Tariff specified in this Article”.

According to the MoF, the regulation aims to encourage consumers to use environmentally friendly vehicles, which are vehicles with two engines: a gasoline engine and an electric motor. Although under normal conditions, vehicles are mainly operated by electric motors and gasoline engines (when the battery runs out of electricity), the emissions to the environment are much lower than other cars. However, it is necessary to supplement regulations on the type of vehicle that is charged with a separate charging system.

According to the MoF, for environmentally friendly vehicles, in addition to cars running on gasoline and electricity or bioenergy, there are vehicles using natural gas. Therefore, it is necessary to provide tax incentives to encourage the production of these vehicles.

The Ministry also proposed to adjust the excise tax rate to remove shortcomings in reality. For example, according to the national technical regulation QCVN 41:2016/BGTVT on road symbol signs, double-cabin cargo pickup trucks are applied road symbol signs system, such as a car without restrictions on time allowed to travel in urban areas, and are allowed to travel in the lanes reserved for cars.

The research shows that countries in the region, such as Singapore, Brunei, and the Philippines, apply tax rates to pickup cars for passenger and cargo transport like other vehicles, regardless of vehicle type. However, some countries apply excise tax rates for double-cabin cargo pickup trucks at a lower rate than for passenger cars with fewer than 9 seats. Example: In Cambodia, the lower rate is at 30%; In Thailand, at about 17%.

To ensure the state management of double-cabin cargo pickup trucks and regulate the use of vehicles in big cities, the registration fee for dual-cabin cargo pickup trucks was revised under Decree No. 10/2022/ND-CP dated January 15, 2022, of the Government. From April 10, 2019, the first registration fee for this truck is equal to 60% of the first registration fee for passenger cars having 9 seats or fewer.

The MoF said that to ensure a tax policy suitable for vehicle use purposes, it is necessary to study the excise tax rate applicable to double-cabin cargo pickup trucks following the current regulations.