IDAʼs comment for Auto.Ria — what impact can recent legislative changes have on the car market
The Cabinet of Ministers has changed the procedure for commission trade in vehicles. These changes will entail a significant increase in taxes in certain cases. Stanislav Buchatskyi, CEO and co-founder of the Auto Market Research Institute, gave answers to questions prepared by Auto.Ria in a video interview.
- Previously, the topic of raising taxes was already covered on the IDA pages, you can read it at this link.
Here are a few fragments from this dialogue in text format:
— Are the new rules for car sales already in effect and where can I get information about the new requirements?
— Yes, the new rules are already in effect. This information has already been officially published on the website of the Ministry of Internal Affairs, in official social networks. Recently, additional documents have been required from those who are directly involved in the trade of vehicles. Namely, the confirmation of the value of the vehicle when concluding the contract of sale.
If we delve into the norm itself, into the creative history, then it was a change to the existing resolution, which regulates the sale of cars that already have Ukrainian registration. And this changed the rules, which were simpler before and allowed any amount to be entered in the sales contract. It was possible, for example, to sell a Range Rover for UAH 5,000 and you did not break any law.
What has changed? Added a simple rule that obliges you to confirm the value of the vehicle you are selling. Even if you write UAH 5,000 in the contract, you must confirm it with the average market price. If this confirmation is not available, the sales contract will not be concluded. The Service Center simply will not register it. I emphasize that this was precisely a change to the resolution.
And changes to the resolution are implemented by the Cabinet of Ministers, and this does not require voting in the Verkhovna Rada hall, does not require a majority of votes, as is done with laws. This can be done unilaterally, the resolution takes effect after its publication. Accordingly, there was no long process to which everyone is accustomed when the law is changed, there is discussion, voting in the first and second reading, discussion in committees. Thatʼs why it was a surprise for everyone.
— How does the Expert Service of the Ministry of Internal Affairs determine the "market value" of a car? How does the calculator work?
— In the resolution, there are 2 options for confirming the market value. The first: if you do not want to contact an expert, you can offer an extract from the existing system that works with us. There is a special calculator available on the state website of the Ministry of Economy of Ukraine. It is called "Vehicles: cost calculation". There is a tab "For the purposes of taxation of operations on the sale or exchange of objects of movable property". And there you can select the make, model, year of manufacture, and see what price this calculator will show. If it suits you, you can give an extract from the calculator and thatʼs enough.
There is a second option. Do you think the average market price for this make and model is lower or higher? Then you can come to an expert who, as an authorized person, draws up an appropriate conclusion and notes a certain price. This price can be affected by both condition and damage. Each expert, if you look at the norms of the law, can value the same car at both $5,000 and $55,000. But, again, the expert has a methodology according to which he works.
— Is tax charged when selling by proxy?
- Sale "by proxy" does not exist in principle. Power of attorney is when I, the owner, give the right (entrust) someone to drive the car. But I remain the owner. That is, even if you gave someone money for a car and you physically have it, and you have the documents, the registration certificate in your hands, and you have a power of attorney from the owner, this does not make you the owner of this car. You are just a person who has been authorized to manage this machine. That is, you will not pay tax, because it was not a sale. But the car will not be yours either.
— How will these changes affect newly driven cars?
— If you drive a car for yourself personally or buy it from an organization that brought this car and sells it with transit license plates, that is, it has not yet undergone the first registration, then the changes will not be affected in any way. Because cars that have cleared customs, but have not yet passed the first registration, are goods. And this company can sell an unlimited number of these cars per year, without paying such a tax as in the case of resale in the domestic market. But paying all taxes like a normal company that earns profit. Therefore, it will be quite a profitable story to bring cars from abroad.
See the full version of the conversation in the attached video.
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