Car customs clearance: whatʼs next? Review of draft laws
In the first 14 days of July, only 3,600 used cars were imported into Ukraine. A significant part of them are those who did not have time for the "zero" customs clearance to expire. Import volumes decreased more than tenfold, but the topic of customs clearance is still actively discussed in society. As a result, more than 10 "automotive" bills have been registered in the Verkhovna Rada. Experts of the Institute of Car Market Research analyzed each of them and predicted which of them could be adopted.
Customs clearance in "Diya"
Number of the draft law: 7466 dated 15.06.2022
Initiator: Cabinet of Ministers of Ukraine
The essence of the draft law: the ability to clear customs on a smartphone online, without the need to visit institutions and organizations. It will be enough to enter the VIN code of the car and upload copies of documents, and payments will be calculated automatically, according to a fixed formula. The size of the single payment will be affected only by the technical characteristics of the car. Certification becomes optional, it will be possible to register the car also in the "Action" application.
Advantages: reducing the level of bureaucracy, convenience and speed. Level business conditions and predictability of payments. Elimination of corruption schemes for determining the customs value. Abolition of the pension fund levy and excise tax on the import of electric vehicles.
Disadvantages: the tax calculation formula contains social injustice, when you will have to pay 5-10% of the value for importing newer and more expensive cars, and more than 60% for importing older and cheaper ones. In addition, some provisions contradict the norms and requirements of the legislation of the European Union.
Risks: the law will be effective only in combination with a fair formula for calculating customs payments. If the approved rates are high for the most popular segment of used cars (worth up to $8,000), the impact on the car market will be minimal, as import volumes will be insignificant.
Probability of approval: high. The concept of "auto customs clearance in a smartphone" has every chance of becoming a real mechanism. It is implemented by the Ministry of Digital Transformation, the system is supported by the President, and therefore there is political will to adopt the draft law.
Customs clearance in Diya, but differently for companies and individuals
Draft law number: 7466-1 dated 06/30/2022
Initiators: Oleksandr Kovalchuk, Danylo Hetmantsev
The essence of the bill: an alternative bill to the government bill on smartphone customs clearance. The main changes concern the formula for calculating customs payments. The cost of customs clearance for individuals and legal entities is proposed to be different. So, companies will have to pay more for customs clearance of cars older than 3 years.
Advantages: it is valuable to clarify that the concept of customs value for cars will be abolished by the end of 2027 or Ukraineʼs accession to the European Union. After all, it is precisely with this norm that there may be problems in the process of European integration of Ukraine.
Disadvantages: the different approach to calculating payments for legal and physical means creates social injustice and inequality of taxpayers. Most Ukrainians buy cars worth up to $8,000 abroad, the customs clearance of which will be cheaper for individuals. This will create an import scheme for the so-called "jackets" and generally shade the Ukrainian automobile business.
Risks: the effectiveness of the reforms will directly depend on what the taxes will be. An unsuccessful tax calculation formula can negate all the benefits of "customs clearance in a smartphone".
Probability of approval: average. Certain provisions of the alternative draft law may be taken into account during consideration by the specialized committee.
Also customs clearance in Diya, but 8 times more expensive for elite cars
Draft law number: 7466-2 dated 06/30/2022
Initiators: Maryan Zablocki and other peopleʼs deputies
The essence of the draft law: another alternative document to the "Cabinet document". Proposes an increased exclusivity coefficient for customs clearance of luxury cars — 8. According to the draft law, cars that are subject to the payment of the annual transport tax will be considered as such. The list of such cars is published by the Ministry of Economy every year. In practice, these are vehicles up to 5 years old and worth up to 2.437 million hryvnias.
Advantages: the 8-fold increase in taxation of luxury cars somewhat compensates for the social injustice contained in the proposed customs clearance formula.
Disadvantages: it is not clear why it was necessary to register an alternative draft law, if it was possible to submit a corresponding amendment during the consideration of the main document in the specialized committee.
Risks: a large number of alternative draft laws may delay discussion and consideration, as well as disperse the votes of peopleʼs deputies.
Probability of approval: low. The proposed norm may be partially taken into account during the consideration of the main draft law in the committee.
To "clear customs" for zero for those who did not make it
Draft law number: 7533 dated 07/08/2022
Initiators: Ihor Fris, Maryan Zablotsky and others
The essence of the draft law: the possibility to use "zero" customs clearance for cars worth up to 10,000 euros, for which a preliminary customs declaration was issued until June 30 inclusive. That is, in the event that as of the end of zero customs clearance, the car did not have time to physically cross the border or complete registration at the customs terminal.
Advantages: an attempt to draw attention to the problems of people trapped with purchased but not registered cars due to the slow and disorganized work of inspection services at the border.
Disadvantages: it is not known how many owners of such cars really remained, because some were forced to clear customs at full rates. Limitation on the value of a car contains high corruption risks. One can only imagine what the temptation will be when the customs office can determine the customs value of the car at the level of both $9,990 and $10,050, and the "asking price" is several thousand dollars in customs payments.
Risks: the project provided for a period of validity of 30 days from the moment of cancellation of zero customs clearance — that is, until July 30 inclusive. Given that legislative procedures usually take a long time, and after the adoption of the law, the customs office is waiting for clarifications and procedures for customs clearance — there may not be time left for customs clearance at all.
Probability of approval: extremely low. There is almost no time left, and the project is not even included in the agenda. Support for the idea among deputies is not enough for adoption.
Two more alternatives have been registered to the draft law. The first is No. 7533-1 dated July 11, 2022, authored by Dmytro Razumkov and other deputies. They offer everything the same, only without a limit on the cost of the car.
The second is 7533-2 dated 11.07.2022, author Serhiy Kuzminykh. Together with cars, the deputy proposes to "clear customs" without paying taxes also other goods, which legal entities did not have time to bring "under zero". It is proposed to leave the conditions the same — a preliminary declaration was submitted by July 1.
Both alternative draft laws, like the main one, have extremely low chances of adoption.
Abolish the customs duty and VAT for cars in the Armed Forces, leave the excise duty
Draft law number: 7554 dated 07/12/2022
Initiators: Mulyk Roman
The essence of the draft law: cancellation of customs duties and VAT for the import of all types of vehicles — buses, trucks, buses and special equipment used by the Armed Forces of Ukraine.
Advantages: an attempt to regulate the import of cars for the needs of the army with the possibility of their subsequent registration at service centers of the Ministry of Internal Affairs.
Disadvantages: the author of the draft law completely forgot about the existence of excise tax, which for cheaper and older cars makes up the majority of payments. Imperfect legal formulation of the norms of the draft law.
Probability of approval: extremely low. The mechanism for importing cars for the needs of the Armed Forces is already provided for by the Law of Ukraine on Humanitarian Aid. It is necessary to regulate only the possibility of registering such cars in service centers of the Ministry of Internal Affairs with the possibility of obtaining permanent license plates.
"Zero" customs clearance, but not for everyone
Number of the draft law: 7498 dated 06/28/2022
Initiators: Ihor Fris, Galina Vasylchenko, Oleksandr Kovalchuk and others
The essence of the draft law: "zero" customs clearance of cars for participants in hostilities and those Ukrainians whose cars were physically destroyed as a result of the war. Only one car can be imported per person. Cars imported in this way cannot be sold for three years, even by proxy, otherwise you will have to pay customs fees in full. Also, premium cars that are subject to the payment of transport tax will not be eligible for the benefit.
Benefits: Trying to provide cars to those who need them most.
Disadvantages: the problem of unavailability of cars in Ukraine is not solved comprehensively. It is not clear how to confirm the destruction of vehicles. The prohibition of alienation and power of attorney still allows you to transfer control of the car simply by handing over the registration certificate. If necessary, the car will be sold just like that.
Risks: the benefits will encourage abuse and the emergence of various "schemes", such as previously with the registration of cars "for the disabled", Afghan veterans, etc.
Probability of approval: average. The idea may find support in the room, but the final version of the document will most likely be different.
Even more restrictions for "zero" customs clearance
Draft law number: 7498-1 dated 06/28/2022
Initiators: Pavlyuk Maksym and others
The essence of the bill: an alternative bill to the one described above. The main differences from the main one: the possibility to import a car tax-free to relatives of the first degree of kinship of those killed in hostilities; the opportunity to use benefits also for legal entities whose cars were destroyed as a result of the war. And the document also offers a greater number of "safeguards", that is, bureaucratic obstacles for those who want to take advantage of the opportunity:
- Cars must be recognized as destroyed due to the actions of the occupants and removed from the register.
- The cost of the car should not exceed 375 times the minimum wage. Today it is almost 2.5 million hryvnias.
- Prohibition of sale and even notary power of attorney for 5 years after car registration. Otherwise, you will need to pay customs fees in full.
The period of validity of such "zero" customs clearance is offered during the period of martial law and two years after its end.
Advantages: actualization of the topic of the unavailability of cars in Ukraine.
Disadvantages: too many bureaucratic obstacles.
Risks: in addition to the described shortcomings of the main draft law, the proposed document includes additional corruption risks, namely, restrictions on the value of cars that will fall under the "promotion". Since the customs value is actually determined manually, it can easily be abused.
Probability of approval: average. The draft law will definitely be actively discussed in the specialized committee and additional amendments will be proposed.
It is obvious that the sphere of import of cars from abroad needs reforms. However, the car market needs a comprehensive reform that will solve the global problem of insufficient level of motorization in Ukraine, and not point solutions in the form of temporary benefits.
The nearest legislative changes should be expected no earlier than autumn, say experts of the Institute of Car Market Research. Among all draft laws, the smartphone has the best chances for customs clearance of cars. There is a so-called political will for the customs clearance of cars in Diya: the Cabinet of Ministers in the person of the Ministry of Digital Affairs acts as the initiator, and the idea is supported by the President. However, the most discussions in the "tax" committee will be precisely around the formula for calculating customs payments.
Also, the draft law on preferential import of cars for military personnel and people who lost their cars as a result of the war has quite high chances. However, in the absence of reform of the import system for the rest of Ukrainians, the mechanism may turn into another "scheme".
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