As market participants expected, the introduction of the automobile recycling tax could not have gone smoothly. Since the law on the new environmental (recycling) tax was adopted in a hurry, its authors did not make provisions for such things as a transition period and adaptation of the legislative framework. Now, it turns out that fulfillment of the requirements of the document, which has already come into effect, is either difficult or impossible. For example, how to determine which automobiles need recycling (there are no criteria for this) or where to send such automobiles. Construction of the promised 10 recycling centers in such a short time was simply a fantastic task.
However, there are other issues that lawmakers were quite capable of resolving. For example, Subsection 250.18.3 of Paragraph 250.18 of Article 250 of the Tax Code stipulates that vehicles are to be registered or re-registered on the basis of receipts for payment of the recycling tax on vehicles that are no longer in use. Everything seems logical: you pay money into the treasury and obtain documentary evidence of this. However, unfortunately, the authorities did not bother to approve the form for this receipt. That is, the State Automobile Inspectorate formally has the right to demand proof of payment or exemption from payment of the tax from owners of vehicles that are imported after September 1. However, the lucky owners of such vehicles cannot provide such proof.
What is happening then? The law on recycling tax is essentially blocking the registration of cars bought in automobile showrooms and paralyzing the automobile market. However, the State Automobile Inspectorate claims that there are no problems - at least, not yet. "Registering is taking place in all regions,” the press service of the State Automobile Inspectorate told the Center for Transport Strategies, promising to provide detailed comments later upon request.
According to unofficial information, there are problems. According to the provisions of the Tax Code, the day when importers are obliged to pay the tax for imported vehicles is the day of submission of declarations while the date of payment of the tax for vehicles assembled in Ukraine is the date of their sale on the domestic market. This means that it is necessary not only to manufacture the vehicle, but also to sell it by September 1. Formally, manufacturers are still payers of the tax because vehicle-disassembling facilities have not yet been constructed. Moreover, payment receipts and documents proving exemption from payment of the tax are not yet being issued. Furthermore, according to the Center for Transport Strategies’ sources, the State Automobile Inspectorate is currently unable to register Ukrainian automobiles.
It is true that manufacturers themselves deny this information and say they are still selling vehicles manufactured before September 1. "As of September 2, there were more than 1,360 automobiles in the dealership network. This stock is enough for sale in the entire month of September and part of October. Automobiles coming off conveyors after September 1 will appear on sale in the second half of the month at the earliest. Meanwhile, automobiles assembled on August 30 have not yet left the territory of the factory. There should be no problems in the next month and a half,” the Bohdan Corporation’s spokesman Serhii Krasulia told the Center for Transport Strategies. He added that the company was hoping to build a disassembling facility on time and assume responsibility for recycling of automobiles produced by Bohdan in order to avoid the recycling tax.
According to the Center for Transport Strategies’ sources, there are currently no problems because manufacturers managed to register a certain number of automobiles at their facilities before September 1. Thus, new automobiles are practically being sold in the secondary market and do not fall under the influence of the recycling tax and the related tax certificates. However, the automobile industry denies this information.
Nevertheless, the superfluous formality in the form of information about payment of the recycling tax complicates operations on the market. after exhausting the stock of automobiles that have "already been sold," dealership networks will eventually have to sell the automobiles that come off assembly lines after September 1. Similarly, importers will eventually have to put the automobiles that undergo customs clearance in early autumn into showrooms.
Some manufacturers managed to register a certain number of automobiles at their subsidiaries before September 1. Thus, new automobiles are practically being sold in the secondary market and do not fall under the influence of the recycling tax and the related tax certificates.
"We have already appealed to the Ministry of Internal Affairs to support our initiative, and we will introduce a bill on abolition of these tax certificates... The Ministry of Revenues and Duties has already supported our initiative because it believes that this tax certificate is not needed... Especially considering the fact that the law on the police does not stipulate that the police should monitor the payment of any taxes," said Oleh Nazarenko, the general director of the Ukrainian Association of Automobile Importers and Dealers (VAAID).
Meanwhile, the market expects an increase in prices and a reduction in sales volumes. "As far as I know, most companies have announced price increases and some have already increased prices from September 1. As for our company, our retail prices will increase on October 1, and we have informed our dealership network about this. On average, it will increase by 3-5%, and this will not be the final increase because each distributor has its own policy for compensating for its losses resulting from duties and the recycling tax. There was an increase in April, the next will be in October, and that will not be the last. We are doing it gradually,” said Nissan Motor Ukraine’s General Director Andrii Nesterenko. He forecast that the market would decline by 15-17 % in 2013, compared with last year, because of the introduction of special duties and the recycling tax.
In addition, importers see not only protectionism in the actions of the authorities, but also lobbying for the political interests of other countries. In particular, according to Nazarenko, trade barriers could result in retaliatory sanctions against Ukrainian goods such goods as ammonia, gravel, legumes, corn, metals, coal, and sunflower. Most importantly, the European Union may refuse to sign an association agreement with Ukraine, said Nazarenko.
“I consider these actions by the Cabinet of Ministers, which amount to sabotaging the orders of the president, as the actions of individual officials aimed at disrupting the negotiations with the European Union. There are certain people who want to drag us into the Customs Union with Russia because their businesses are tied to Russia. They are doing their best to derail the initiative of the President of Ukraine regarding the signing of the agreement with the European Union,” said Nazarenko.