11:12 07.06.2018

Lawmakers initiate extension of preferential excise duties for imported used cars for two more years

4 min read

KYIV. June 7 (Interfax-Ukraine) – The Verkhovna Rada by the end of this year could pass a bill setting among other things the rules for importing used cars (and the legalization of cars with foreign license plates, but synchronously some lawmakers initiate the extension of the law on imports of used cars at the reduced excise duties which is in effect until the end of this year, MP Robert Horvat has said.

"The car market in Ukraine is in dire need of being regulated. There are already two options for solving the problem, under which the cars foreign license plates will fall. The first is from the parliamentary committee, and the second is mine. I think the committee's bill will be registered in the Verkhovna Rada in two or three weeks. If, however, I doubt it, it is not adopted, that is, my bill that pursues the same goals and includes, in particular, the car "old age tax", that is, a differentiated excise duty depending on the age of the car," Horvat said at a press conference at Interfax-Ukraine on Wednesday.

At the same time, according to him, "in case of emergency," the deputies also pronounce the option of extending the law on importing cars at reduced excise rates, one of the initiators of which is Horvat.

According to his data, from August 1, 2016 (when the law took effect) through early 2018, Ukraine imported more than 80,000 used cars. In this case, only in 2017 (full year of the law) UAH 5.4 billion was sent to the national budget from the procedure for their customs clearance.

"I think the law can be extended for another couple of years," Horvat said.

He recalled that the excise duty rates were reduced by 50-96.4%, or up to EUR 0.2 maximum per 1 cubic cm of engine capacity, depending on the type of the vehicle. Thus, the final price of the car is below the market value by approximately 40%.

As reported, according to the changes to the Tax Code, individuals and legal entities from August 1, 2016 through December 31, 2018 can import one car into Ukraine per year (issued not earlier than 2010), which can only be resold in a year. At the same time, reduced excise rates do not apply to cars that have origins or are imported from the aggressor country.

"Is it worth to close the business that brings an annual budget replenishment of at least $200 million, besides it is absolutely legal business, as all cars imported under the preferential law pass official customs clearance and receive Ukrainian registration," Deputy Director General of Euroterminal Olena Hiriayeva said.

She said that on the website of Ukrainian President Petro Poroshenko the company registered an electronic petition with a proposal to consolidate preferential rates for the importation of used cars on an ongoing basis, which has already collected nearly 13,000 signatures out of 25,000 needed.

Hiriayeva said that cars imported under this law comply with environmental standards of at least Euro 5, whereas in Ukraine the average age of the car is 20 years, and they comply with the Euro 0 emission standard.

Asked about the impact of the current law on the market of new cars, Horvat said that, according to statistics, it is hardly possible to talk about the decrease in sales of new cars in connection with the legal import of used cars.

"In 2015, Ukraine imported 46,546 new cars, receipts to the budget amounted to UAH 6.4 billion, in 2016 – 65,562 cars (proceeds are UAH 12.4 billion), and in 2017, when the law was already working in full force, 82,300 cars (UAH 15.8 billion). That is, this law did not affect new car sales, and the problem is rather the import of cars with foreign license plates, which are even imported as new ones," the people's deputy said.