As per the roadmap, by 2025, the import tax rate for cars from the European Union (EU) to Vietnam will be further reduced to a range of 30 – 35%. This reduction will provide an opportunity for many to access luxury vehicles.
According to the commitments made in the EU-Vietnam Free Trade Agreement (EVFTA), Vietnam will open its market to imported cars from the EU. Specifically, Vietnam will cut taxes over a period of 10 years, with an average reduction of about 7% annually, ultimately reaching a tax rate of 0% after a decade.
Cars falling under group B9 (tax base to be eliminated after 10 equal reductions, once a year) and B10 (tax base to be eliminated after 11 equal reductions, once a year). The base tax rates for these vehicles, as negotiated in the EVFTA, are 78% (for cars with an engine capacity of less than 3.0L) and 74% (for cars with an engine capacity of 3.0L or higher).
By 2025, the import tax on cars from the EU to Vietnam will be approximately 35% for vehicles with an engine capacity of less than 3.0L and 30% for those with an engine capacity of 3.0L or higher.
In Vietnam, fully imported cars from the EU are mostly luxury brands such as Mercedes, Audi, BMW, Land Rover, Lamborghini, and Ferrari.
The reduction in import taxes will lower the amount of special consumption tax and value-added tax payable, resulting in more affordable car prices and improved accessibility for Vietnamese consumers to European car models.
According to experts, there is a shift in Vietnam’s automotive market from affordable cars to mid-range luxury vehicles. Currently, luxury cars priced between 1.5 and 3 billion VND are quite popular. Therefore, with the expected tax reduction, the domestic car market is anticipated to witness significant excitement and activity in the coming years.
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