With few owners of cars with foreign and diplomatic registration plates completing transfer procedures on the vehicles due to the enormous taxes required, the finance ministry said it may ask the government to impose a tax cut to encourage the transfers.

The owners of these special cars have bought them from foreign diplomatic officers, who imported them to Vietnam for use during their working terms, and resold them when they left the country. There are some 1,200 such sedans in the country, according to the finance ministry.

But most of the reselling deals were done without the required transfer procedures or application for a new license plate because the new owners have to pay taxes that are equal to, or even higher than, the sum to buy a similar car with a normal number plate.

The owners, however, had been asked to complete the procedures and pay taxes by June 10, otherwise their vehicles would be confiscated.

But two months after the deadline, only 126 cars with foreign and diplomatic registration plates have been registered for the transfer procedures as “the transfer tax remains a big issue,” car owners complain.

N.V.T, a Hanoi resident who bought a car with a diplomatic license plate, said he has left his vehicle unused at home over the last two months.

T said the required tax is so high because the finance ministry requires that the tax calculation be based on the tax rate at the time of transferring. Hence, while the car T bought from a diplomatic officer in 2004 now costs only some VND500 million, the tax he has to pay to have it transferred is VND1.4 billion.

“I’d rather not use it and use that money to buy another car,” he said.

In a bid to solve this issue, Deputy Minister of Finance Do Hoang Anh Tuan said the ministry will call on the government to apply a new tax rate to encourage car owners to carry out the procedure.

Specifically, the tax will be the average of the tax rates at the time of resell and the time of transfer. With this new calculation, the tax the man in Hanoi will have to pay for his car is only VND719.5 million, rather than VND1.4 billion.

Tuan said if the proposal is approved, those who have already paid the high tax would be refunded to ensure fairness.