Due to obligations under the ASEAN Free Trade Agreement, a zero per cent tax will apply on automobiles imported from ASEAN jurisdictions with a localisation rate of 40 per cent or more in the ASEAN country of origin.

In order to stimulate automotive assembly in Vietnam, the Government has issued Decree No. 125/2017/NĐ-CP, lower the tax rate on auto parts imported from ASEAN nations to zero. The zero import tax an auto parts will result in lower costs for locally assembled vehicles, increasing Vietnam’s competitiveness in the important Automotive industry.

In order to qualify for the zero import tax incentive, importing enterprises will have to meet certain  conditions relating to the manufacture, assembly, import of vehicle parts, along with warranty services and auto maintenance for customers in Vietnam, as set out in the Decree 116/2017/NĐ-CP.

Under Decree 116, importers shall be required to obtain an automobile importing business licence from the Ministry of Industry and Trade and must have appropriate warranty and maintenance facilities and be authorised by the manufacturers in exporting countries to conduct recalls in the country if needed.

These automotive businesses must also commit to producing and assembling vehicles that meet Euro 4 emissions standards (from 2018 to 2021) and Euro 5 (from 2022 onwards).