Eurobonds: whatʼs next?
Today, the Verkhovna Rada adopted bills № 4643-d and № 4644-d on the legalization of "Eurobills" as a basis. We evaluate their advantages, disadvantages, practicality and chances of adoption in general.
The Peopleʼs Deputies voted by a majority for the documents developed on the basis of the profile "tax" committee, which provide for preferential conditions for customs clearance only for "Eurobills" imported before 31.12.2020. All other proposals of peopleʼs deputies were not put to the vote.
The cost of customs clearance is proposed to be calculated by the formula. It will depend on the type of fuel, engine capacity and age of the car. The customs value of the car will not affect the calculation of payments in any way. The average cost of customs clearance under these rules will range from $ 1,000 to $ 2,000.
ADVANTAGES OF BILLS
These are the first bills put to a vote in the Verkhovna Rada of the new convocation, which reduce the cost of customs clearance. It is also the first attempt to finally solve the problem of "Eurobills" by the current majority.
Customs clearance will not take into account the customs value of the car — one of the main corruption risks and tools of manipulation. A clear calculation formula gives certainty and predictability of customs payments. Thatʼs the end of the benefits.
DISADVANTAGES OF BILLS
Representatives of many factions of the Verkhovna Rada spoke about the shortcomings of the proposed legislative initiatives. The main remarks were: selectivity, non-integrated approach, social injustice.
- The rules will apply only to already imported cars, until December 31, 2020. For those who legally import "fresh" cars from abroad, there will be no discounts.
- The rules will only be valid for 180 days. When in the future there is a need to change the car, it will be possible to clear customs only at full rates.
- The requirement of the Euro-5 environmental standard remains for buses and trucks. Cars — not lower than "Euro-2". This will not allow customs clearance of absolutely all cars already imported into Ukraine.
- Unfair assessment of taxes: their size depends on the age of the car. The newer and correspondingly more expensive car — the less you have to pay. Customs clearance of luxury cars will be cheaper than a budget minivan.
Also, certain provisions of the draft laws contradict international agreements. Article 85 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax provides that the importation of any goods from abroad must be based on customs value. In turn, the methods of determining the customs value in the European Customs Code do not provide for the possibility of using plates and formulas.
The desire to reduce corruption at customs is commendable and necessary, but this problem must be addressed in the light of European experience and without violating international agreements. After all, Ukraine is heading for the EU, and the European integration direction is fixed in the Constitution.
In general, the decisions will have a negative impact on the car market : there may be temporary distortions in car prices. Cars cleared under special conditions may appear on sale at a price below the market average. Especially — luxury cars, the difference can reach tens of thousands of dollars.
If the bills are passed in general, the procedure for customs clearance of cars will remain unchanged. Apart from the amount of customs duties, there will be only one advantage for "Eurobills" imported by the end of 2020: you do not need to go abroad and re-import cars. In practice, everything will look something like this.
- After paying UAH 8,500 in a "voluntary" fee (and a de facto fine for violating customs rules), a foreign-registered car must be brought to the nearest customs post. This can be any internal regional customs that carries out customs clearance of vehicles.
- It is necessary to confirm the ownership of the vehicle, namely — to provide a contract of sale, invoice or any other document stating that the car belongs to the person who expressed a desire to clear it.
- Confirmation of deregistration of the car in the country of registration is required. Unregistered vehicles are not allowed for customs clearance — this is a requirement of Ukrainian law.
- Some countries allow deregistration without the physical presence of the car (for example, Poland and Lithuania), in some others the car must be inspected by a specialist (for example, in Slovakia). There is no complete remote deregistration without visiting the registration authorities. Beware of scammers who "deregister" cars with a pack of A4 paper and a home color printer.
- Do not forget the registration certificate. If the car is from Poland, the kit should also include "karta pojazdu" — a red book with the full history of the car in the country. To a car registered in Germany — a small and a large "brief". The set of registration documents depends on the country, everywhere in different ways.
- You can file a customs declaration yourself, without a broker. But only theoretically. In practice, this requires the ability to fill out such a document — fines for false information in the declaration are considerable. And also — special software, because it is almost impossible to submit a declaration just like that. The bills do not provide for changes in the procedure for filing customs declarations, so in most cases you will have to contact a customs broker.
- As the laws do not change the procedure for customs clearance and the first state registration of vehicles, customs clearance will be possible only for those cars that meet the standards not lower than "Euro-2" (for cars) and "Euro-5" (for trucks).. This can be confirmed by a certificate of conformity issued by specialized certification laboratories. Excessive bureaucracy, but the bills do not provide for changes to this procedure.
- We must not forget about the need to pay a fee to the Pension Fund for the first state registration, from 3% to 5% depending on the cost of the car.
Summing up all the above costs, customs clearance of some "Euros" can be economically unprofitable. For such, it was possible to export such a car outside Ukraine, paying the same UAH 8,500 "voluntary contribution". However, do not rush to go to customs — the bills have not been approved.
PROBABILITY OF APPROVAL IN GENERAL
Bills № 4643-d and № 4644-d were adopted only in the first reading. This means that in the future they will be re-discussed in the relevant committees of the Verkhovna Rada, and then — a vote in the hall of parliament and the signature of the President. Judging by the fact that representatives of many factions opposed the vote today, the discussion can be quite intense.
As practice shows, the cases when the bills easily "fly" the first reading in the hall, and the second reading either does not reach at all, or after changes in the committees are radically different from the original version. It is obvious that the peopleʼs deputies will definitely make their proposals for amendments to these documents.
The so-called "amnesty" of cars with foreign registration was discussed in 2016-2017. In the end, the idea was abandoned because the change in customs clearance rules should apply to all categories of citizens. Therefore, the probability of passing the bills in its original form is quite doubtful, although it is possible for political reasons.
"Eurobonds" are a consequence and an indicator, not a root cause. Tax rules require changes, not only in the passenger car segment, but also in trucks and buses. However, any change must affect everyone and act on an ongoing basis.
In general, the proposal to legalize only previously imported "Eurobonds" is a political decision to finally "close the issue" with "Eurobonds" and fulfill one of the election promises. It will not have a long-term impact on the Ukrainian car market. And, despite the promises of some MPs to continue to develop new laws on affordable customs clearance, further changes may be postponed.
Regardless of how the history of "Eurobills" ends, the formation of new car legislation must be continued, moving from street protests to discussion in an expert community.