Circular No. 1515-TC/TCT regarding tax treatment for imported automobiles converted to different functions

LETTER

OF THE MINISTRY OF FINANCE NO. 1515 TC/TCT DATED FEBRUARY 27, 2001
REGARDING TAX TREATMENT FOR IMPORTED MOTOR VEHICLES WITH CHANGED FUNCTIONALITY
TRANSFORMATION FUNCTION

Dear: - Ministries, ministerial-level agencies, and government agencies

- People's Committees of provinces and centrally-administered cities

Pursuant to the Law on Export Duties and Import Duties and amendments thereto; Special Consumption Tax Law and Value Added Tax Law;

Implementing the Prime Minister’s Directive in Circular No. 33/CP-VI dated January 11, 2001 of the Government regarding tax treatment for imported motor vehicles with changed functionality;

The Ministry of Finance guides on tax treatment for imported motor vehicles and vehicle parts allowed to be assembled or modified to change their functionality as follows:

1. All types of motor vehicles, vehicle parts, chassis equipped with engines (hereinafter referred to collectively as motor vehicles) permitted for importation must pay import duties, value added taxes, and special consumption taxes (if applicable) according to the actual tax rates of imported motor vehicles, vehicle parts, or chassis at the time of entry through Vietnamese customs.

2. In cases where after importation, assembly, modification, or change in functionality results in a different type of motor vehicle from that originally imported (e.g., trucks modified into passenger cars, truck parts assembled into passenger cars, and vice versa), no additional tax collection or refund shall be required at the import stage based on the post-modification type of motor vehicle.

Enterprises engaged in production, assembly, modification, or change in functionality of motor vehicles for themselves or other organizations and individuals must pay value added taxes and special consumption taxes (for taxable types) during the production, assembly, modification, or change process according to the actual tax rates applicable to the modified or changed type of motor vehicle, specifically as follows:

- For imported motor vehicles assembled, modified, or converted into passenger cars with fewer than 24 seats and other types of vehicles designed for both passengers and cargo; pick-up trucks are subject to special consumption taxes and shall be implemented in accordance with Circular No. 168/1998/TT-BTC dated December 21, 1998 issued by the Ministry of Finance guiding the implementation of Decree No. 84/1998/NĐ-CP dated October 12, 1998 of the Government detailing the implementation of the Special Consumption Tax Law.

- For imported motor vehicles assembled, modified, or converted into types other than those subject to special consumption taxes are subject to value added tax and shall be implemented in accordance with Circular No. 122/2000/TT-BTC dated December 29, 2000 issued by the Ministry of Finance guiding the implementation of Decree No. 79/2000/NĐ-CP dated December 29, 2000 of the Government detailing the implementation of the Value Added Tax Law.

3. For imported light trucks with passenger car styling that are modified into passenger vehicles must still be subject to tax collection at the import stage according to the Prime Minister’s Directive in Circular No. 806/CP-VI dated July 16, 1998 of the Government and implementing guidance documents from the General Customs Department.

For imported motor vehicles classified as garbage trucks but not used for waste transportation purposes and instead modified or used for other purposes must still be subject to tax collection at the import stage according to Circular No. 5107 TC/TCT dated October 11, 1999 of the Ministry of Finance regarding classification of garbage truck items for import duties.

The Ministry of Finance provides guidance on taxes related to assembly, modification, or change in functionality of motor vehicles for relevant agencies to coordinate and implement.