Imported vehicles with nine seats or less - and engine displacement of 1,500cc or less - will enjoy a cut from the current tax rate of 45 per cent to 40 per cent, beginning this July 1. — VNS Photo Doan Tung

HÀ NỘI Viet Nam News -  — Lawmakers decided to reduce tax on vehicles with low engine displacement, while increasing tax on vehicles with high engine displacement of more than 2,500cc. Engine displacement is the volume swept by all the pistons inside the cylinders.

In a report submitted to National Assembly delegates for approval, the Government said high engine displacement vehicles use a lot of fuel, their large sizes are not suitable for the country’s traffic infrastructure, and the cost of such vehicles and gas for them strains people’s financial resources. These vehicles also produce high amounts of exhaust fumes, which pollute the environment.

Meanwhile, the reduction in the special consumption tax for low engine displacement vehicles will create opportunities for middle-income people to buy their own vehicles, thus boosting the development of the country’s automobile industry.

The changes are part of the revised Law on Special Consumption Tax approved by a majority of National Assembly delegates on April 6. The new rules will go into effect on July 1.

The Special Consumption Tax tariff on autos will see lot of changes with the new regulations.

Imported vehicles with nine seats or less - and engine displacement of 1,500cc or less - will enjoy a cut from the current tax rate of 45 per cent to 40 per cent. The tax rate will be further reduced to 35 per cent on January 1, 2018.

Tax on vehicles with engine displacement of more than 1,500-2,000cc will remain at 45 per cent of the car’s value until December 31, 2017. The tax rate on this category of vehicles will then decrease to 40 per cent on January 1, 2018.

As for vehicles with engine displacement of more than 2,000-2,500cc, the tax rate will remain at the current rate of 50 per cent.

Lawmakers decided to raise taxes on vehicles with engine displacement of more than 2,500-3,000cc. The current tax rate of 50 per cent will rise to 55 per cent. The tax rate for this category of vehicles will rise to 60 per cent on January 1, 2018.

Vehicles with high engine displacement of over 3,000cc will see their tax rate increase sharply from their current tax rate of 60 per cent.

A tax rate of 90 per cent will be levied on vehicles with engine displacement of more than 3,000-4,000cc. And a tax rate of  110 per cent will be levied on vehicles with engine displacement of more than 4,000-5,000cc. Vehicles with engine displacement of more than 5,000cc will be taxed at 130 per cent. And vehicles with engine displacment of 6,000cc will be taxed at 150 per cent.

Meanwhile, motorhomes will be taxed at 70 per cent as of July 1 this year. The motorhome tax rate will rise to 75 per cent on January 1, 2018.

The Việt Nam Automobile Manufacturers’ Association (VAMA) predicts that about 260,000 autos will be sold this year, a 10 per cent increase from last year. — VNS