In the near future there may be a bill in the Parliament that will have all the chances to solve the problem of importing from Europe of used cars and their subsequent legalization.

According to official figures, there are about half a million cars with foreign numbers, or “Euro-cars” in Ukraine. Deputies assert that there are three times more. And in the western border areas, where such cars drive the most, it is believed that we have all 3 million. Therefore, the problem with their customs clearance and legalization of those that travel on the roads of Ukraine illegally every day becomes more acute.

The Head of Government believes that the country needs joint rules of the game for all, with a single system of customs clearance. Legislators, who are trying to find a formula that will suit all, promise to cope with the task until the fall. However, the owners of the Euro-cars, despite the fact how difficult it is to find a common language, are afraid that this process may drag on again.
While people’s deputies work out a bill that would eventually settle the problem with customs clearance of cars (the current procedure for temporary importation of vehicles of personal use by citizens to the customs territory of Ukraine is defined in Article 380 of the Customs Code), acquired by our fellow citizens abroad, these same citizens by hook or by crook try to avoid high taxes. And enterprising officials are willing to help them with this.

A very recent example of such “help” – recently the SSU officers detained a bribe of the Head of the Customs Clearance department of the post “Solotvino” of the Transcarpathian customs, for “gratitude” arranged almost “green corridor” through the international checkpoint for the car on foreign registration. The operatives documented 7 facts of the bribe, getting by the customs officer, the total amount of which is one thousand dollars.
A month before, the border guards had uncovered a scheme for the illegal importation of Euro-cars with Polish and Lithuanian registrations from Poland, which included the use of counterfeit check cards with border service and customs marks about crossing the border. In addition, as noted in the department of Ukrainian patrol police, the number of road accidents with the participation of cars with the European registration has also increased recently. If in 2017 the percentage of accidents, accounted for the share of “euroblocks”, did not exceed 6, then by the results of the first quarter of this year, accidents involving cars on foreign registration already constitute 8.5% of the total.

Should punitive “whips” be used?

Therefore, the desire of parliamentarians to block the oxygen for those, who use such schemes and earns, at first glance is understandable. And, given the statistics, published by the State Fiscal Service, it is quite fair. So, according to the State Fiscal Service, last year more than 958.5 thousand cars with foreign registration were imported to Ukraine, while 209.6 thousand of them were in transit mode, and almost 748.9 thousand were in temporary import mode.
At the end of January this year in Ukraine as a whole is almost 425.4 thousand cars with the European registration. Among 100.9 thousand cars, imported in transit mode, there are more than 82.2 thousand cars with violation of the term on the customs territory of our country. Among 324.5 thousand of temporarily imported, there are more than 164.2 thousand cars with violation of the term. At the same time, according to the data of the fiscal authorities, the largest number of such cars – 110.7 thousand – was imported from Poland. In the second place – Lithuania (51.7 thousand). The third place is occupied by Germany (19.8 thousand). The next is followed by Bulgaria (14.1 thousand) and the last – Czech Republic (13.1 thousand).

The bill, developed in the Verkhovna Rada Committee on Tax and Customs Policy, provides for a set of punitive measures for Euro-car owners. If it was taken to the session hall and accepted, the Ukrainians would be given the right to go without hindrance by such cars in our country for up to 10 days. If a person imports a car in Ukraine, and then transfers it for use to someone else or decides for spare parts, he would face a penalty of 17,000 UAH. And if the car belongs not to a physical one, but to a legal entity, then in that case 170,000 UAH will be fined. To ensure that the police and the fiscal service have a real opportunity to control Euro-cars, the bill provides for the creation of a special electronic database of cars that have entered the territory of Ukraine.

People’s deputy Nina Yuzhanina, who heads the profile parliamentary Committee, provided a bill to familiarize the owners of cars with the European registration. However, in the all-Ukrainian public organization AvtoEuroSyla, uniting the owners of Euro-cars, such punitive-repressive norms of the future draft law were not accepted – and the deputies had to sit down with motorists at the negotiating table. The Committee on tax and customs policy noted that they see two options for the development of the situation: either to lower the excise rate now, so that these people could also pass customs clearance according to the general scale, or to resort to the experience of other countries that have leveled the excise, introduced compulsory technical inspections and strengthened the financial responsibility for car insurance policy.

Corridor of customs clearance – from 500 to 1200 euros

As Mykhailo Solovyov, one of the founders of the NGO AvtoEuroSyla, noted in the commentary to Opinion, the bill, proposed by the Committee on Tax and Customs Policy of the Verkhovna Rada, contained many so-called punitive norms and huge fines, so their organization was categorically opposed. However, it was possible to find mutual understanding with people’s deputies. Now the joint working group is working in the Verkhovna Rada Committee, which also includes the lawyers of the State Fiscal Service, agreeing the standards acceptable to car owners at foreign registration.

“We agreed that we will meet further in order to consult on controversial positions, – explains Mykhailo Solovyov. – The age norms for cars, which will be imported to the territory of Ukraine, have already been agreed upon. They should not be older than the 1997 release, and this is the Euro-3 standard. Of course, the customs clearance of cars will depend on the year of production and the volume of the engine. For example, for a 2005 BMW car with an engine capacity of 3 liters, the diesel, it will cost 828 euros. All cars with engines of more than 3 liters will cost more, but in any case no more than 1200 euros. The minimum cost of customs clearance is 500 euros, that is, it is a corridor of 500-1200 euros”.

Now, according to the representative of AvtoEuroSyla, questions are being worked out as to the mode in which cars will be driven into the territory of Ukraine, transit numbers, invoice and other nuances will be needed. “Legislators cannot prohibit such cars from entering our country because it would be a violation of the Istanbul Convention, which Ukraine ratified in 1998, – the co-founder of the public organization said, – our main requirement is to completely eliminate the excise, because the car is not excisable goods. At the same time, there should be a VAT and a duty, and this is a third of the cost of the car, that is, the same money. Another requirement is to abandon the Euro-5 standard. This will allow unhindered import of cars that are affordable in the financial plan”.

The cornerstone is a high excise tax

Particularly worried about the problem with the customs clearance of Euro-cars in those regions of Ukraine that have a border with Europe. “Our region, like the whole of Western Ukraine, is fundamentally different from Central and Eastern, as it is in this region that there are a lot of used cars with foreign registration, – said Mykola Sobutsky, deputy of the Lutsk City Council, in commentary to Opinion. – We have 2 options: people came for 5-10 days, and then go abroad again and return, that is, crossing the border every 5-10 days. And there are those that drive in for a year, bypassing the legislation with the help of foreigners. Ukraine, on the one hand, is the poorest country in Europe, and on the other – there are many expensive cars here. This is wrong, and so it should not be.

If anyone forgot, then a large excise tax rate was approved under Yanukovych, but large car assembly factories were lobbied for, so we did not have any production at that time, and now we do not. But the high rate of excise remains so far, which should not be. We like no one else want this problem to be resolved in a way that does not harm those, who use such a car, or plans to buy it in the future”. People, according to Mykola Sobutsky, bought a used car abroad for their own money, they have a business with it, somebody carries something, feeds their families, so they worry about their property.

“Buying abroad cheap used cars, Ukrainians thus find at least some ways to solve their problems, – says Oleg Vynogradov, a resident of Kyiv with years of driving experience. – It is clear that all these attempts with fines are aimed at filling the budget. However, in our country, under the guise of a good goal, usually a lot ends with kickbacks and filling purses of officials. As a person close to the medical industry, I can give an example: the construction of a state sanatorium for the rehabilitation of the ATO soldiers is declared. And what if the result is not a sanatorium, but a hotel? Not state, but private. Not for rehabilitation, but for entertainment. And not for the ATO soldiers, but for those, who pay. The main thing is the idea of social orientation, but it turned out, in principle, no one cares. So here, in fact, very few people care about the problems of specific car owners of the Euro-cars”.

As Mykhailo Solovyov recalls, the older cars that meet the Euro-5 standard, are 2011 release. “In Europe, when purchasing vehicles, – he stresses, – there is no condition for them to comply with one or another Euro standard, these standards are applied in production, why should Ukrainian drivers be discriminated in this regard?”

“A car is like an ax for a lumberjack”

To hear the opinion of the residents of Volyn, the people’s deputy, the Chairman of the Subcommittee on the customs affairs of the parliamentary committee on tax and customs policy Tetyana Ostrykova, visited them. “After consulting, we came to the conclusion that it is necessary to cancel the requirement to deliver cars that meet the Euro-5 standards. As we are a border zone, a lot of people are faced with European legislation, and I also came across it, – says Mykola Sobutsky. – The fact is that in Europe this standard does not apply to the purchase of a car, but to production. And we are being misled with this Euro-5, and the whole of Ukraine”.

What does this mean in practice? “Any Pole can go to Germany, buy there the “Golf” the third, drive him to Poland and customs clearance for about 200 dollars. And this amount includes all payments, with numbers and registration of the technical passport, – explains the deputy of the Lutsk City Council. – And what about us? Somehow friends, our colleagues from Transcarpathia conducted such an experiment: they bought Zaporozhets, drove him to Poland and there he cleared customs and put there Polish numbers. But they could not come back – only for 5-10 days, that is, in transit mode. So, the standard Euro-5 should be left only for the production of cars, and not for imports into our country. Secondly, to sort out finally the excise duty, which is now working not only to harm people, but the country as a whole, because the owners of such cars are looking for ways to drive them, but not customs clearance”.

“If the government does not want to give up 40-60% of the tax on the cost of cars (which is impossible in one other civilized country), nothing will happen. At one time, the excise tax was introduced under the good pretext of supporting the national producer, – adds Oleg Vynogradov. – And where is our Ukrainian car industry? For 20 years – nothing, even “ZAZ” is not released. Clearly, the idea did not work. But the excise remains”.

To settle the situation, notes my interlocutor, it is necessary to break the very approach to the car as a luxury item. “In fact, it is for many people a tool of production. Let’s say, as an ax for a lumberjack: There are no axes – there is no work, – says the Kyiv resident. – Transport and roads – this is the most universal tool for all types of activities. And it’s not just about trucks and buses. Small cars do not do less, if not more. Recollect, with what Germany began after losing in the war, or America after the great depression. Roads and cheap cars. In Germany, Volkswagen is a folk car that is available to every family. In the US – subsidies! Not excises, but subsidies to automakers. Already in the 70s of last century anyone could afford to buy a car there. And we have: a man grown a dozen pigs and bought a car for three thousand dollars (not 15, but for 3!) to bring meat to the market. So he is already outlawed. Maybe someone of the deputies will answer, why does this person, who feeds other people with meat, need such a law?”

“We need a new scale of excise tax rates”

Having assessed the situation, they slightly changed the vector of their work in the profile Committee of the Parliament. However, as far as the legislators will make concessions to the owners of Euro-cars, while it is difficult to say. “The current excise tax rates were not set by us. If we analyze them, we can conclude that at first only new cars were protected, because they have the lowest rate, – explains to Opinion the Chairman of the Verkhovna Rada Committee on Tax and Customs Policy Nina Yuzhanina. Then, as motorists remember, there was a rate hike – in order to protect the market from very old cars. And higher rates for cars with a large engine volume, which are probably classified as luxury goods.

“Taking into account the practice of other European countries and the fact that our country is unlikely to be advanced in the field of the automotive industry, now we generally need to approach the development of a new scale of excise tax rates, – said the people’s deputy. – Therefore, now, first of all, it is necessary to approach the study of this issue in a comprehensive manner and analyze the experience of neighboring countries that do not have their own production, and then, taking into account their developments, establish a new excise tax scale for cars. And thus, solve the problem, including the problem that now exists with cars on foreign registration.

It is this path that is the most correct, since it will, on the one hand, prevent the indignation of those 9 million Ukrainian citizens, who paid the tax on the acquisition and registration for the first time in Ukraine of such a car. And on the other hand, to solve the problem that has developed with the use of customs cleared, illegally imported cars to the territory of Ukraine. And to make the most balanced bill in the hall, the Chairman of the profile Parliamentary Committee emphasizes, the working group not only listens to those, who have such cars and puts forward their demands, but has already started working with scientists”. For whatever variant we offer to people, who use illegally imported cars, in most of their norms they are not satisfied. – Nina Yuzhanina emphasizes. – And secondly, it does not satisfy those people, who paid taxes. Even having acquired Lanos for UAH 200,000, they paid 60% of the tax on this amount. How will they respond to concessions to those, who import cars from abroad? Of course, mostly negative. But the question is ambiguous. Let’s work together a little more – in order to find the most acceptable option for everyone.


Deadline – March 2019

According to the Chairman of the Parliamentary Committee on Tax and Customs Policy, each country when solving automotive issues, it is determined that it will at the same time protect first of all: the environment, infrastructure or even some important moments for its citizens. “If the excise tax rates are low, then in such countries, customs clearance of cars cannot forge a certificate of the cost of such a car, – said the MP. – On the borders of our country, there are whole tents of the companies, which give out inquiries about cost of the car, which is underestimated in 3-4 times. And this amount is further influenced by the value of added tax, which is 20%”.
According to Nina Yuzhanina, they should be fought not with the size of the excise tax, but still with all the procedures that are performed in the process of customs clearance of cars. “All of them should correspond to the current legislative norms of Ukraine. If there are manipulation and abuse there, we cannot take the same step as, for example, European countries for which excise tax is not the main tax, as they receive large amounts of money in the budget when paying 20% of VAT, – she explains. – And for us this indirect tax, which does not depend on the value of the car, was the most understandable and acceptable, since it was an absolute value that could be reduced. And everything that is calculated and depends on some indicators, in our country always changes”.

And although there is no final version of the draft law, which could already be registered in the Parliament, – says the people’s deputy, – the problem is already so overrepresented that we need to solve it in the near future. The final version of the bill in the Parliament is promised to be worked out by autumn, however, as one of the leaders of AvtoEuroSyla notes, taking into account our political realities, the adoption of the law can be postponed until March of the next year – just for the election. And how much, while delaying the solution of this problem, the state treasury will lose, this is another question, the answer to which, up to the last hryvnia, depends on the political will of our leaders.

Text: Larysa Vyshynska

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