Customers look at cars at a showroom on Nguyen Van Cu Street in Ha Noi. The Ministry of Finance has proposed increasing the special consumption tax on imported goods to ensure fair competition between locally manufacturered and importerd products. — VNS Photo Viet Thanh

HA NOI (Biz Hub) — The Ministry of Finance has proposed to increase special consumption tax on imported goods to ensure fair competition between locally manufactured products and imported ones.

Under the current regulations, the special consumption tax on imported goods is calculated keeping in mind their cost, insurance, and freight (CIF) value plus current import tariff.

However, the ministry said the import tax on automobiles and air-conditioners would be lowered to zero under the country's commitment to international integration. The current special consumption tax on imported goods would not ensure fairness between local and imported items. It could become vulnerable for importers to take advantage of the tax cut for transfer pricing, causing losses to the State budget and making domestic producers less competitive.

Therefore, it proposed to revise the regulations by adding domestic sale fee on importers. The domestic sale fee should be calculated on the basis of fees paid for services such as packing, managing, advertising, displaying, transporting, and the warranty plus interest of tax payers.

However, the new calculation faced strong opposition from several businesses as the special consumption tax on the imported goods could be increased by 15 per cent from current levels.

The Viet Nam Beer, Alcohol and Beverage Association said this upwardly revision in tax was not suitable for imported beer and alcohol sector.

Nguyen Van Viet, the association's chairman, told online newspaper vneconomy that imported goods would face double taxation: tax on import as well as sale tax.

According to alcohol importers' calculation, this could increase the special consumption tax to 60-65 per cent instead of the current 55 per cent.

In addition, Viet said such a high tax would lead to cases of tax evasion, smuggling and counterfeit goods. Moreover, it would not serve the purpose to ensure fairness between local and imported alcohol, particularly since the amount of imported beer and alcohol was not high.

Under the Decree No 94/2012/ND-CP on alcohol production and trading, importers would sell their products to distributors, wholesalers or retail shops.

Tax payers and agencies would face difficulties in tax declaration and payment with too much paperwork and too many procedures due to the additional tax, he added.

The association last month sent a document to the Viet Nam Chamber of Commerce and Industry opposing the plan. — VNS