Vietnam Debates Proposed Tax Increase on Pickup Trucks
Discussions are underway regarding a proposed increase in the Special Consumption Tax (SCT) on pickup trucks in Vietnam, a move that has generated debate among National Assembly deputies.
The draft Law on Special Consumption Tax suggests raising the tax rate on pickup trucks to 60% of that applied to passenger cars with the same engine capacity. Under current law, pickup trucks are taxed at a rate ranging from 15% to 25%. The proposal would increase this to 24%–54% for double-cabin pickup trucks, representing a potentially significant rise.
Delegate Nguyễn Thị Việt Nga expressed concern about the immediate impacts of such a tax increase. She noted that a sudden hike could negatively affect consumer behavior, potentially reducing vehicle sales. As a result, this could lead to job losses and a decrease in state revenue from taxes, including import duties, registration fees, and value-added taxes on both domestically produced and imported vehicles.
To mitigate these concerns, Nga proposed a gradual increase over a three-year period, from 2027 to 2030. The plan would see the tax rate increase by 3% per year, for a total of 9% spread evenly over the three years, rather than a sharp rise of 9% to 20% in the first year.
Delegate Nguyễn Văn Cảnh pointed out that pickup trucks serve different purposes in Vietnam compared to countries like the US and Thailand, where they are primarily used in rural areas for agriculture. In Vietnam, pickup trucks are used in both rural and urban settings, and some are restricted from operating in urban areas during peak hours.
Cảnh emphasized that if pickup trucks are treated as trucks, they should be subject to the same road use restrictions and taxes as trucks. Conversely, if they are considered passenger vehicles, they should have unrestricted access to roads that allow passenger cars.
The National Assembly’s Economic and Financial Committee reviewed the proposal and acknowledged concerns about potential disruption to small businesses, particularly in rural areas, that rely on pickup trucks for transporting goods. The committee highlighted that small and medium-sized enterprises (SMEs) often use pickup trucks, and an increased tax rate could negatively affect their operations and the broader business environment.
The Committee suggested postponing the application of the new tax regulations for pickup trucks to avoid impacting businesses and the overall economy. They noted that, under the current special consumption tax system, pickup trucks already benefit from favorable taxation compared to other vehicle types.
Deputy Minister of Finance Cao Anh Tuấn clarified that the proposal to increase the tax rate is due to the fact pickup trucks are treated like passenger vehicles under current traffic regulations. Recognizing the potential immediate impact, the government is considering a phased approach, with the SCT tax rate gradually increasing from 50% to 60% of the passenger car rate over the next three years.
The final decision on this matter will likely depend on further consultations and adjustments to the proposal to balance long-term benefits for the national budget with short-term effects on businesses and consumers.
