Công văn 7109/BTC-CST

In response to requests for instructions on determination of the Special Excise Tax (SET) rate for imported hybrid cars, the Ministry of Finance, after consulting the Ministry of Trade and Industry, Ministry of Science and Technology, Ministry of Transport, Ministry of Justice, Vietnam Register, Ministry of Planning and Investment and Vietnam Car Manufacturer’s Association, responds as follows:

Pursuant to Article 7 of the Law on SET: SET on hybrid cars that run on both electricity and gasoline or biofuel and gasoline where gasoline consumption does not exceed 70% of the total energy consumption shall be  70% of  SET imposed on the same type of cars.

Pursuant to clause 2, Article 5 of the Decree No. 26/2009/ND-CP detailing a number of articles of the Law on SET dated March 16, 2009 of the Government: hybrid cars that run on both electricity and gasoline or biofuel and gasoline in point 4dd of the Schedule of SET  according to the manufacturer’s standards are cars that run on a type of fuel in which the ratio of gasoline does not exceed 70% of the total fuel, or cars whose gasoline consumption does not exceed 70% of total energy consumption compared to the most fuel-efficient car which has an equal number of seats and the same cylinder capacity.

Therefore, cars eligible for the tax rate in point 4dd of the SET schedule, Article 7 of the Law on SET shall be determined as follows:

1.  Hybrid cars running on a mixture of gasoline and biofuel are those running on a type of fuel in which the ratio of gasoline does not exceed 70% of the total fuel by volume according to the manufacturer’s standards.

2. For hybrid cars that run on both gasoline and electricity, the gasoline consumption to ratio the total energy consumption not exceeding 70% shall be determined by comparison with the most gasoline-efficient cars that have the same number of seats and cylinder capacity in Vietnam. Car importers and domestic car manufacturers and assemblers shall submit the manufacturer’s documents on the fuel consumption of every type of cars to customs authorities and tax authorities as the basis for determination of SET rate and shall be responsible for the accuracy of the submitted documents.

The responsible authorities shall compare the gasoline consumption of the gasoline-powered car with the most gasoline-efficient car that has the equal number of seats and cylinder capacity launched by the same manufacturer in the same year. If such manufacturer produces no similar gasoline-powered cars in that year, the comparison shall be made based on the most recent gasoline-powered car.

3. For any car that has both a gasoline engine and an auxiliary engine powered by electricity generated from gasoline (such as Lexus h1, Prius, Camry hybrid, Honda Insinght), or car that runs on electricity produced by a gasoline-powered electric generator: shall not be eligible for concessional tax rates under Article 7 of the Law on SET as they run only on gasoline and are not categorized as hybrid cars that run on both gasoline and electricity.

Any arising issues should be promptly reported to the Ministry of Finance.