HANOI: The Ministry of Finance has announced a plan to increase luxury taxes on cars with large engines after the government said big vehicles that take up much space and consume much fuel must be restricted.
According to the ministry’s new proposal, the special consumption tax rate for cars with engines of more than three liters, including motor homes, will be raised from the current 60 percent to 75 percent from July next year.Most of these big cars belong to luxury brands manufactured in Japan and Europe.
The luxury tax rate on cars with small engines of 1.5 liters, on the other hand, will be cut from the current 45 percent to 25-30 percent. Other cars in between will subject to taxes of 40-50 percent. The proposal is now open to public discussion.
Vietnam’s government in July announced an automobile development strategy which will restrict the use of cars with large engines, saying they consume a lot of fuel and their big size is beyond local infrastructure’s capability.
The trade ministry earlier this year even proposed to raise special consumption tax on cars with engines bigger than six liters to a whopping 195 percent.
