Under the new Customs Tariff, import duties for vehicles were reduced (e.g. import duty for passenger vehicles was reduced from 30 percent, but not less than EUR2.15 per cm3 of the engine capacity, to 25 percent, but not less than EUR1.8 per cm3 of the engine capacity).
At the same time, a new utilization fee for vehicles was introduced from 1 September 2012 (amendments to the Federal Law on Waste of Production and Consumption, and Article 51 of the Budget Code of the Russian Federation, dated 28 July 2012 no128-FZ).
Utilization fee payment procedure
The Russian government has introduced a procedure for calculating and paying utilization fees (Resolution of the Russian government, dated 30 August 2012 # 870). Under this procedure:
- A utilization fee is charged for vehicles (i) produced in Russia, (ii) imported into Russia (both new and used). The utilization fee is not applied to vehicles that are imported into Russia from Kazakhstan or Belarus and have the status of Custom Union goods, provided that certain requirements are met.
- The amount of utilization fee is calculated by multiplying the established ratio by the base rate The base rate for motor cars is RUB20,000, approximately EUR500.
- The ratio depends on the engine capacity, vehicle weight and seat capacity. For example, for new motor cars with an engine capacity over 1,000 cm3 but not more than 2,000 cm3, the ratio is 1.34. Thus, the utilization fee is RUB20,000 x 1.34 = RUB26,800 (approximately EUR650). The maximum fee (for dump trucks weighing over 350 tons) may reach RUB6,000,000 (approximately EUR148,000) per vehicle.
Exemption from utilization fee
Car producers may be exempt from the utilization fee if the producer:
- agrees to recycle the car when it is no longer in use
- is a legal entity registered in Russia
- manufactures cars with a Vehicle Identification Number (on body components (cabs) and chassis)
- manufactures cars under a special regime or by applying particular technologies, such as welding or painting
- arranges collection points throughout the country for cars subject to the utilization fee.
These exemptions are not applicable to car importers.
Impact on businesses
Considering the positive effect of the reduction in the import duty rate, the impact of the utilization fee may be significant, creating additional costs for companies and consumers. Moreover, if the cost of recycling cars after the period of use is higher than the utilization fee, it may not be beneficial for car producers to apply for an exemption.
An accurate estimate of the utilization fee and a review of the possible options for minimizing its negative impact is vital for automotive businesses.