Visitors examine an imported car at a show in Ha Noi. Tax cuts scheduled for next year pose a serious threat to the country's auto industry. — VNS Photo Doan Tung

HA NOI (Biz Hub) — Several types of vehicles will enjoy import tariff cuts beginning next year in line with Viet Nam's commitment to the World Trade Organisation (WTO) on tax reduction.

According to the Ministry of Finance, which drafted the plan, all tarrif cuts will take effect on January 1, 2015. It said the tax on four-wheel drive (4WD) vehicles would be reduced from 70 per cent to 59 per cent while the import tax on trucks with a loading capacity of less than five tonnes would be reduced from 59 per cent to 56 per cent.

The tax on motor homes, or self-propelled recreational vehicles which offer living accommodation, and on cars with less than 10 seats and an engine capacity of less than 2.5 liters, will be cut from 67 per cent to 64 per cent. The tariff on motorcycles, sidecars and mopeds will also be reduced from 47 per cent to 40 per cent.

Meanwhile, ASEAN members' auto imports are already receiving a preferential 50 per cent import tariff since early 2014 as a result of the ASEAN Trade in Goods Agreement (ATIGA). In addition, under commitments to the ASEAN, auto import taxes in 2018 will be completely abolished.

ASEAN will waive taxes on car imports between ASEAN member countries, as well as from Japan, South Korea and China, who are all party to the agreement.

The tax cut poses a serious threat to the country's auto industry, which is expected to compete with the price and quality of imports.

According to the General Office of Statistic, Viet Nam imported 44,000 cars in the first nine months of this year worth $938 million, a 74 per-cent increase in quantity and a 90.2 per cent increase in value year-on-year. — VNS