Vietnam cuts tax rates for imported petroleum, VAT

The Vietnamese Ministry of Finance implemented several tax cuts in February, including preferential tax rates on imported petroleum, which it slashed from 35% to 25%. It also halved the country’s value-added tax (VAT) from 10% to 5%. In response to the VAT cut, carmakers Toyota Motor Corp. and Honda Motor Co. shaved prices by 4.3% to 4.6%, while Euro Auto Corp., the official distributor of BMW AG in Vietnam, reduced prices of imported vehicles from 4.55% to 6.15%. Vietnamese automakers faced slow sales in January, despite aggressive incentives being offered to buyers. The Vietnam Automobile Manufacturers Association (VAMA) said sales dropped 68% in January from the same period a year ago to 3,852 vehicles. (February 7/13, 2009)