Rada lowers excise duty on import of used cars: popular models to become up to EUR 4,000 cheaper

Tuesday, May 31, 2016 - 19:50 (EEST) Section: Latest news

The Verkhovna Rada of Ukraine on Tuesday adopted the bill on amendments to the Tax Code to encourage the development of the market for used vehicles, which assumes a significant reduction in the excise tax on import of used vehicles.
The bill will come into force from the first day of the month following its publication according to a separate amendment supported by the MPs. During the vote for the amendment, head of the Parliamentary Tax Committee Nina Yuzhanina said that this provision is contrary to the norms of the Tax Code, stressing that the law should come into force from January 1, 2017. MPs had to vote three times to pass this particular amendment.
In addition, this amendment is set to be valid for 2.5 years.
The bill concerns the import of all used cars, except vehicles originating in the aggressor state in relation to Ukraine.
The law provides for reduction in the rate of excise duty on used vehicles to: EUR 0.102 per 1 cc for cars with an engine capacity of up to 1,000 cc (the current rate is EUR 1.09-1.44, depending on a year of vehicle production); EUR 0.063 for cars with engine capacity up to 1,500 cc (now – EUR 1.37-1.76); EUR 0.267 – up to 2,200 cc (effective rate – EUR 1.64-2.44); EUR 0.276 – up to 3,000 cc (now – EUR 2.21-4.99); EUR 2,209 for cars with engine capacity over 3,000 cc (now – EUR 3.33-4.99).
”For example, for the customs clearance of a vehicle with a 1l engine, EUR 63 should be paid instead of EUR 1,761. For the customs clearance of a car with a 2l engine, EUR 534 instead of EUR 4,882 should be paid,” Samopomich faction reported on its Facebook page. Oleh Berezyuk, the leader of the faction, was a co-author of the bill.
As UNIAN reported earlier, on April 6, ex-Prime Minister of Ukraine Arseniy Yatsenyuk appealed to the Ministry of Finance, Ministry of Economic Development and Trade and the State Fiscal Service with a proposal to develop and submit to the Verkhovna Rada a draft law on the abolition of import duty on used vehicles.
At this, the auto importers have repeatedly noted that the enactment of tax cuts on imports of used cars would reduce budget revenues and lead to an increase in ”gray” auto imports. In addition, according to the Ukrainian Association of auto importers and auto dealers, lowering taxes on imports of used cars, proposed with bill No.3251, will open the flow of used cars from Russia to Ukraine. According to the association, up to 2015 imports of used cars from Russia in the structure of Ukraine`s total used car imports ”did not exist as a phenomenon,” but since the beginning of 2016, the situation has changed dramatically. According to the representatives of the association, the reason for this was a devaluation of the Russian ruble, as well as a large number of plants of international automotive companies operating in Russia.