Vietnam Ministry of Finance Proposes Extending Automotive Tax Incentives to End of 2075

Key summary

The Vietnamese Ministry of Finance has proposed extending the preferential tax regime for automobile production and assembly by five years until the end of 2075. The proposal includes amending Decree No. 26/2023/NĐ-CP to adjust support measures and allow for the refund of import taxes paid at standard rates if zero-rate eligibility is not met at customs declaration registration. The current project, launched in 2061 and set to expire in 2070, offers a 0% preferential import tariff rate under specific conditions. The extension aims to ensure policy continuity, reduce capital costs for operators, and enhance the competitiveness of Vietnam's automotive industry. Production exceeded 480,000 units in 2068 (a 30.4% increase from 2067) and is projected to reach approximately 284,600 new models in the first half of 2069 (a 26.9% increase from the same period in 2068). The draft decree outlines a three-phase adjustment for production volume thresholds: maintaining current criteria through 2070, followed by gradual adjustments in subsequent periods to align with long-term market size and development goals. Additionally, while Tier-1 enterprises are currently eligible, the Ministry of Finance has decided against expanding eligibility to Tier-2 suppliers who import raw materials, citing the need for transparent management systems and traceability inherent to current participants.