Home » Markets, Trade » New car taxable prices make used imports more expensive

The decisioNew car taxable prices make used imports more expensiven by the General Department of Customs (GDC) to apply new taxable prices since October 18 would lead to the increases of used imports’ prices. Meanwhile, the prices of the products to be distributed by authorized importers would be unchanged.

Since October 18, the new taxable prices have been applied to many luxurious models including Audi, BMW and Lexus, which are 8000-22,000 dollars higher than the previously applied levels.

The taxable price adjustments, which lead to the higher tax importers have to pay, is believed to make luxurious cars much more expensive.

However, observers say the car sale price increases have occurred with used imports only, while the official distributors authorized by manufacturers would keep the sale prices unchanged.

Nguyen Dang Thao, Business and Marketing Director of Euro Auto Vietnam, the official reseller of BMW brand cars in Vietnam, has affirmed that the new decision by the customs department would not change the sale prices of BMW cars to be distributed by Euro Auto Vietnam.

As for the cars imported through the official channel, the taxable prices must be the prices announced by the manufacturers and written down in the import contracts. Therefore, the prices of BMW cars would be uninfluenced by the new decision by the customs department.

The Lien A International Joint Stock Company, the authorized importer of Audi brand cars, or Toyota Vietnam, importing Yaris cars would not adjust the retail prices.

Meanwhile, used imports would bear higher tax. According to the currently applied method of calculating tax, stipulated in a Prime Minister’s decision released in August 2011, the tax on the cars with the cylinder capacity of 1.5-less than 2.5 liters would be defined as follows: import tax = X + 5000 dollars (X means the taxable price).

Meanwhile, the used imports with the cylinder capacity of 2.5 liters and more would be calculated by X + 15,000 dollars.

Therefore, once the taxable prices increase, the tax importers have to pay would increase accordingly, which would force importers to raise the sale prices.

A used Audi Q7 with the cylinder capacity of 3.6 liter 2007 series has the new taxable price of 39,000 dollars (up by 8000 dollars in comparison with the previous level), which means that its sale price would be 28,000 dollars higher.

Analysts believe that with the high prices, used cars would be more expensive than brand new imports.

Not only used cars, but brand new cars to be brought to Vietnam not by authorized importers, would also see the prices increasing.

Toyota Yaris 2009, which previously had the taxable price at 11,000 dollars, now has the new taxable price at 17,000 dollars. This means that the car price would increase by 17,000 dollars to 48,000 dollars, after the import tax, luxury tax and VAT tax.

As for Lexus GX 460, the new taxable price of 65,000 dollars (+ 22,000 dollars) would make the car price increase by 68,000 dollars to over 200,000 dollars.

GDT has decided to fix the taxable prices of the products imported not by authorized dealers, after it found out that the importers declared wrong import prices in order to evade tax.

A Toyota Yaris, for example, was declared as having the import price at 8000 dollars only.

Car dealers have complained that the decision was made so suddenly that they cannot get adapted to the new circumstances. A car dealer said it would be very difficult to sell cars with the price increases of hundreds of millions of dong, even though the imports are luxurious models which only target high income earners.

(Vietnam Net)

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