No Tax Loss with Imported Gift Cars

Customs authorities affirmed that there is no tax loss on vehicles imported into Vietnam in the form of gifts.

That confirmation was addressed by customs authorities in the press conference to this effect on May 25. Right after Deputy Prime Minister Le Minh Khai asked the Ministry of Public Security and the Ministry of Finance to verify that poor households were reportedly presented with supercars from abroad. Shell companies disappeared from their registered addresses as soon as vehicles were cleared from ports.

At the press conference, Mr. Au Anh Tuan, Director of Customs Supervision and Administration, affirmed: “Customs authorities will strictly handle violations in licensing, there will be no cover-ups”, adding that no tax loss has occurred to the State Budget from imported gift cars. A total of more than VND12,600 billion of tax was collected from imported gift cars since 2016. In addition to import and export duty, special consumption tax, and value-added tax, importers are also subject to extraordinary income tax.

Mr. Tran Bang Toan, Deputy Director of the Import-Export Tax Department under the General Department of Vietnam Customs, added that, importers declared more than 1,000 gift cars valued at VND3,300 billion from the beginning of 2021 to the end of the first quarter of 2022. However, after conducting probes, customs authorities determined the payable tax would be VND4,745 billion, claiming back more than VND1,400 billion for the State Budget.

Currently, no tax incentives are applied to imported gift cars, with commercial cars imported by domestic firms. No companies have ever reported inequality between these two types of imports.

The volume of imported gift cars accounted for less than 1% of total imported cars of fewer than nine seats in the last five years. About 1,000 gift cars were imported into Vietnam every year in the 2016-2017 period. The figure declined to 213 vehicles in 2019 and to 480 in 2020. However, it jumped to 795 units in 2021 and 160 units in the first five months of 2022.

According to Circular 143, each organization or individual in Vietnam is allowed to import a vehicle as a gift from a foreign country a year (not for commercial purposes) if it proves its relationship with a foreign partner. After showing import and export declarations, payment documents, contracts and emails, the vehicles are cleared and recipients can use or transfer such gift vehicles. But according to Decree 116, only companies that have automobile warranty and maintenance facilities or have a lease contract signed by an enterprise and belong to a system of authorized dealers are eligible for importing cars for selling.

While affirming no tax loss, Mr. Au Anh Tuan said that the General Department of Customs proposed amending Circular 143 to end its responsibility for licensing imported gift cars because this authority is given to specialized ministries such as the Ministry of Industry and Trade, while the Ministry of Transport provides management measures on quality standards.

By Hien Le, Vietnam Business Forum