Why are cars so expensive in Vietnam?

Business and Legal | 2019-09-27

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Most residents of HCMC tend to not purchase cars due to the high taxes involved and, actually, Vietnam is one of the most expensive places to purchase a car. Expats and foreigners may try to import their previously owned cars but that will also cost a lot more. It’s not uncommon for a four-seat sedan that costs VND460M in the United States to run up to VND1.1B in HCMC.

Unfortunately policies relating to the auto industry in the country are constantly changing and it’s difficult to give an accurate list of taxes for automobiles. Listed below are the three types of taxes tied to importing cars into Vietnam in 2015 (Import Tax, Special Consumption Tax and the Value Added Tax).

Brand new car

››Less than 1 litre (engine capacity): 70% of original sticker price

››1-1.5 litres: 70% of original sticker price

››1.5-3 litres: 64-70% of original sticker price

››More than 3 litres: 55-70% of original sticker price

Used car (less than 5 years, 9 seats or less)

››Less than 1 litre: US$3,500

››1-1.5 litres: US$8,000

››1.5-2.5 litres: X + US$5,000

››More than 2.5 litres: X + US$15,000

X = original sticker price multiplied by the Import Tax Rates for brand new car.

Cars with 10 to 15 seats

››Less than 2 litres: US$9,500

››2-3 litres: US$13,000

››More than 3 litres: US$17,000

It is important to note that Import Tax must decrease yearly due to Vietnam’s participation with the WTO and regional trade agreements.

Special Consumption Tax is applicable to special goods and services. With cars up to five seats, it can run up to 60% tax on the car’s original sticker price. Between six and 15 seats, it is from 30-50%, and between 16 to 24 seats, it is 25%. Note that electric cars are taxed at half the rate of their petrol guzzling cousins.

A Value Added Tax (VAT) of 10% of the car’s original sticker price is tacked on as well.

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