July 13, 2020 23:39

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With reduction of registration fee, consumers will save up to VND300 million

10:25 | 11/06/2020

VCN- Following the direction of the Government, the Ministry of Finance has completed the draft Decree regulating registration fee rates for domestically manufactured and assembled cars. In particular, it is proposed to reduce 50% of registration feesfor domestically manufactured and assembled cars by the end of 2020 to stimulate consumption and solve difficulties for automobile business and production in the context of the Covid-19 pandemic.

 

with reduction of registration fee consumers will save up to vnd300 million Draft Decree on reduction of registration fee
with reduction of registration fee consumers will save up to vnd300 million When were manufactured and assembled automobiles domestically eligible for registration fee reductions?
with reduction of registration fee consumers will save up to vnd300 million 50% reduction of registration fees to rev up domestic car sales
with reduction of registration fee consumers will save up to vnd300 million
The reduction of registration fee for domestic cars is a solution to promote economic growth by the automobile industry. Photo: ST


Effective till the end of 2020

The draft Decree will be implemented according to the simplified process andis effective from the signing date until the end of December 31, 2020. Proposed items forthe reduction are cars, trailers or semi-trailers pulled by cars and similar vehicles domestically manufactured and assembled for first registration (first payment of registration fee) stipulated in the Government's Decree No. 20/2019 / ND-CP of February 21, 2019, amending and supplementing a number of articles of

Government Decree No. 140/2016 / ND-CP of October 10, 2016 on the registration fees and the decisions of the People's Committees of the provinces and centrally runs cities on the registration fee collection from the effective date of this Decree until the end of December 31, 2020. From January 1, 2021, the registration fee rate for cars will return to the current rate.

Deputy Minister of Finance:

The Ministry of Finance has issued documents to guide the relevant agencies to complete the documents for internal consultation, and then the draft decree will follow the consultation process with ministries and sectors and then be submitted to the Government members. The Ministry will try its best to promulgate the Decree as soon as possible,” said Deputy Minister Vu Thi Mai.

In particular, answering the question of whether to retroactively reduce the registration fee while waiting for the Decree to be issued, the representative of the Ministry of Finance said that the Government requested the 50% reduction of registration fees to stimulate consumer demand, the drafting decree agency suggested that it should not be retroactive.

“If there is a regulation on retroactivity, it will have to return the money to those who bought cars before the time of the Decree. This is complicated, unreasonable and has no effect on stimulating consumer demand. Therefore, this 50% reduction of registration fee will be effective from the signing date for promulgation of the guiding decree,” said Deputy Minister Vu Thi Mai.

According to the drafting agency, a 50% reduction of registration fees for domestically manufactured and assembled cars is a solution that contributes directly to reducing costs for car ownership registration and increasing accessibility to automobile products of consumers, thereby helpingcustomers to buy cars after the pandemic. This reduction not only contributes to stimulating consumption of automobile products but also encourages the consumption of other goods and services or investment needs of the people.

In practice, if a buyer of domestically manufactured or assembled cars with less than 9 seats, worth VND400 million and registered in Hanoi, the registration fee is only VND24 million compared to current level of VND48million (current registration fee rate is 12%). For those who buya car with higher value, the savings will be higher. According to preliminary calculations, the 50% reduction of registration fees for domestically manufactured and assembled cars helps consumers of domestically manufactured and assembled cars save around VND15 - 300 million (depending on the car model).

Revenue to be reduced by VND6,000 billion

For manufacturers and distributors of domestically manufactured and assembled cares, the 50% reduction of the registration fee for domestically manufactured and assembled cars will stimulate demand for cars manufactured and assembled in the country, support distributors to sell inventories since the Covid-19 outbreak, increase sales, offset costs and losses due to the disease, helpingthe domestic automobile manufacturing and assembling industry soon overcome the crisis and develop.

In addition, supporting consumption will help domestic automobile manufacturers boost production and assembly of new cars to the market, improving the competitiveness of domestically manufactured and assembled cars, striving to reach 70% of domestically manufactured and assembled cars, meeting domestic market demand and aiming to export to the ASEAN region.

For the socio-economy, this is a solution to help the economy grow because the automobile industry is considered a key industry, currently contributing about 3% tothe country's GDP. According to the Ministry of Industry and Trade, the trend of motorization in Vietnam is forecast to happen in the near future, when GDP per capita exceeds US$3,000 and the average number of cars is 50 cars per 1,000 people. Besides, Vietnam is in the golden population phase with arapid increase of the middle class - potential and large consumers for individual cars. By 2025, the domestic market demand is expected to reach about 800,000 to 900,000 cars per year and in 2030 about 1.5-1.8 million cars.

In order to restore the growth of the automobile industry, in addition to efforts from domestic automobile manufacturers and distributors, the proposed reduction of registration fee is a necessary financial support solution to increase domestic purchasing power, creating momentum for reproduction and resuming the supply chain. Thereby, contributing to creating jobs, increasing incomes for employees, ensuring social security, spreading spillover effects to other economic industries and promoting economic growth after the Covid-19 pandemic.

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However, this reduction will affect the local revenues because under the provisions of the State Budget Law, the revenue from registration fee belongs to the local budget. The Ministry of Finance said that the 50% reduction of registration fee for domestically manufactured and assembled cars may reduce the local budget revenue in2020 by about VND6,000 billion.

 

 

By Hong Van/ Huyen Trang