The Vietnamese government has decided to raise import taxes on automobiles as part of its efforts to reduce the soaring trade deficit, an official said Monday.
Deputy Finance Minister Do Hoang Anh Tuan, in a decision Thursday, increased tax on wholly assembled cars to 83 percent from current 70 percent, said a ministry official who identified himself only as Tu.
Just last month, the government raised the import tax on imported cars from 60 percent and Prime Minister was urging for more tax hikes to cut surging trade deficit.
The government also raised the tax on imported parts by 3 to 5 percent to 25 percent, the official said. The new tax rates take effect on Tuesday.
"This new measure aims to cut the soaring trade deficit as instructed by the prime minister," he said.
Vietnam reported a deficit of $7.4 billion in the first quarter of this year, up from $1.7 billion in the same period of last year, according to government figures.
Auto sales are surging in Vietnam amid robust economic growth.
More than 10,000 wholly assembled cars were sold during the January-March quarter, the government said.
Sales of autos assembled in Vietnam jumped 180 percent from a year ago to 34,000 units during the same period, the figures from Vietnam Automobile Manufacturers Association or Vama, showed.
"The new tax rates are unlikely to affect our sales," said Nguyen Hoai Anh, sales manager of a Toyota (nyse: TM - news - people ) dealer in Hanoi.
"At the moment, demands for our cars exceed our production capability, our customers have to wait three to five months to have their cars delivered," he said adding Toyota Vietnam is unlikely to raise prices considering the small increase in import tax on car parts.
There are estimated 1.2 million vehicles in Vietnam, a country of 85 million people.
Deputy Finance Minister Do Hoang Anh Tuan, in a decision Thursday, increased tax on wholly assembled cars to 83 percent from current 70 percent, said a ministry official who identified himself only as Tu.
Just last month, the government raised the import tax on imported cars from 60 percent and Prime Minister was urging for more tax hikes to cut surging trade deficit.
The government also raised the tax on imported parts by 3 to 5 percent to 25 percent, the official said. The new tax rates take effect on Tuesday.
"This new measure aims to cut the soaring trade deficit as instructed by the prime minister," he said.
Vietnam reported a deficit of $7.4 billion in the first quarter of this year, up from $1.7 billion in the same period of last year, according to government figures.
Auto sales are surging in Vietnam amid robust economic growth.
More than 10,000 wholly assembled cars were sold during the January-March quarter, the government said.
Sales of autos assembled in Vietnam jumped 180 percent from a year ago to 34,000 units during the same period, the figures from Vietnam Automobile Manufacturers Association or Vama, showed.
"The new tax rates are unlikely to affect our sales," said Nguyen Hoai Anh, sales manager of a Toyota (nyse: TM - news - people ) dealer in Hanoi.
"At the moment, demands for our cars exceed our production capability, our customers have to wait three to five months to have their cars delivered," he said adding Toyota Vietnam is unlikely to raise prices considering the small increase in import tax on car parts.
There are estimated 1.2 million vehicles in Vietnam, a country of 85 million people.
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