Vietnam’s Prime Minister Pham Minh Chinh has asked the Ministry of Finance to put together a draft decree that would reduce registration fees for local assembled cars by 50 percent.
Of note, however, is that concerns were raised by the Ministry of Finance last week, that a car registration fee reduction policy that applies only to locally made vehicles could contravene the European Vietnam Free Trade Agreement. This was reportedly raised by the EU as a potential problem late last year and could put Vietnam could be at risk of being sued. It’s not clear what the thinking is on this at this stage.
Car registration fee cuts have been popular in the past, particularly after COVID, to stimulate the local economy. It has been revealed, however, that last year the EU suggested by applying the cut to domestically made and assembled cars only, that this would violate terms in the EVFTA.
Car imports from Europe to Vietnam mostly came from France and Germany in the first half of this year and were worth a little shy of US$10 million collectively.
Import taxes on cars and motorcycles before the EVFTA came into force were between 32 percent and 70 percent. These will be progressively reduced to zero over the first seven to ten years of the agreement.
See also: Vietnam’s Automotive Industry: Foreign Investor’s Guide 2024