High-displacement bikes get 90% tax

[totalmotorcycle]

High-displacement bikes get 90% tax
Tuesday, November 14, 2006 - VNECONOMY - vneconomy.com.vn



The import of motorbikes with high-displacement engines into Viet Nam will be allowed beginning in August of next year subject to the same temporary tariff of 90 per cent as other classes of motorbikes, according to the Ministry of Finance.

Quach Duc Phap, head of the ministry’s Tax Policy Department, said that high-displacement motorbikes would also be subject to a value-added tax (VAT) of 10 per cent but would not be subject to a special consumption tax.

Under the new policy, a US-made Harley-Davidson motorcycle which was priced at US$5,000 in other countries would be sold at $10,450 in Viet Nam, which includes the 90 per cent import tax and 10 per cent VAT but excludes transportation costs.

According to the ministry, large displacement motorbikes remain a sensitive category of import goods, and tax policy has been designed to discourage their importation into Viet Nam. However, allowing the import of these motorbikes was an issue in Viet Nam’s bilateral WTO negotiations with the US, so they will be allowed in subject to a sizable tax to limit the number that find their way onto Viet Nam’s roadways.

Importers would also be required to obtain permission from the Ministry of Trade. The vehicles must meet technical, safety and environmental requirements set by the Ministry of Transport.

Only those between the ages of 30 and 40 would be eligible to drive these vehicles and would need to be granted a particular licence from the Ministry of Public Security.

The ministries of Trade, Finance, Industry, Transport and Public Security were continuing to draft legal documents that would regulate the import and use of these larger, more powerful motorbikes.

Despite the high taxes and restrictions, importers expect a sizable market duc to pent-up demand for these motorbikes among some high-income consumers. They expect the vehicles to be a popular luxury item.

A representative of an automobile importing enterprise in Ha Noi revealed that he had decided to import high-displacement motorbikes a year ago when he realised that the market would be significant and demand high once Viet Nam joined the WTO.

The high cost of automobiles, poor transportation infrastructure, and narrow streets make motorbikes the most effective transportation solution for Vietnamese people, he explained.

High-displacement and unusual motorbikes would become a status symbol and fashion accessory for high-income individuals not yet interested in buying cars, he indicated.

Bui Huy Thuc, director of Hai Phong branch of the Viet Nam National Complete Equipment and Technology Import-Export Corporation, said that several customers had ordered high-displacement motorbikes, but the company had not yet promised delivery of the bikes due to uncertain regulations.

Source: Vietnam Agency