Rada slashes excise duties on used cars until 2019

Ukraine's Verkhovna Rada has passed at second reading a bill that temporarily, until December 31, 2018, cuts excise duties on used passenger cars.

The measure aims at removing temporary imports schemes to avoid taxation.

A total of 237 lawmakers supported the bill on Tuesday.

The bill will take effect on the first day of the month following the month when the document is published.

The measure implies the reduction of excise duties only on passenger cars made after January 1, 2010. Imports of cars from the country declared the aggressor countries are banned.

Individuals or companies can import only one car for own needs paying lower duties. If the car was sold in the period of 365 days, the owner is to pay the full excise duty.

Excise duties on used cars with petrol engines of up to 1,000 cubic centimeters are set at EUR 0.102 per cubic centimeter (the same as for new cars). It is 91% less than the current excise duty for these cars no older than five years (EUR 1.094).

The largest decline is foreseen for the excise duties collected from cars with engines of 1,000-1,500 cubic centimeters: they are decreased by almost 95.5%, to EUR 0.063 per cubic centimeter.

The excise duty for cars with engines of 1,500-2,200 cubic centimeters is decreased by 83.9%, to EUR 0.267, with engines of 2,200-3,000 cubic centimeters – by 87.5%, to EUR 0.276 and with engines of more than 3,000 cubic centimeters – by 33.4%, to EUR 2.209.

The document envisages the reduction of excise duties on used passenger cars with diesel and semidiesel engines.

According to an explanatory note to bill No. 3251, amid national currency devaluation and a fall in buying power of the public sales of vehicles plunged. This entailed a decline in jobs and payments to the budget.

"Consumers cannot buy new imported cars due to their high cost and used cars due to high excise duties, which make their cost uncompetitive," the document said.

AUTO-Consulting said that with the adoption of the bill customs clearance of used cars will cheapen sharply.