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VIETNAM: Domestically-Produced Auto-Parts Set to be Exempt from Special Consumption Tax

The Ministry of Finance has proposed abolishing the Special Consumption Tax (SCT) on all locally-produced automotive parts destined for use in the assembly of vehicles with a maximum of nine seats. At present, the total SCT payable on locally-assembled cars is calculated on the basis of the manufacturer’s selling price, but the proposal would see the value of all domestically-produced automotive parts excluded from the selling price of the final product when calculating the due amount of SCT.

Overall, it is hoped that the proposed move would not only reduce product prices, but would also lead to higher localisation rates, while providing a boost for the country’s domestic automotive supply chain. The change is not expected to be formally adopted, however, until its implications for the country’s WTO obligations have been fully evaluated.

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