Russia Set To Introduce Swingeing New Import Taxes On Cars

by Tatiana Smolenskaya, Tax-News.com, Moscow

12 January 2009

The Russian government is standing firm in the face of increasingly vociferous protests by Russian motorists over its decision to substantially increase duties on imported cars.

The new system of import taxes is designed to discourage the importation of cheap cars into Russia and thus help to prop up the country's own ailing car industry, which is suffering from a drop in demand. However, the measures, which are due to come into effect on January 12 according to a decree signed by Prime Minister Vladimir Putin last month, have provoked a wave of angry protest over the past weeks, not least in the outlying areas of the east which are heavily dependent on the supply of cheap imported vehicles.

The complex new system will determine how much import duty is paid on a particular vehicle depending on its type and age. But the older (and presumably cheaper) vehicles will be taxed most heavily: cars and trucks older than five years will have import duties of 70% or more applied.

The Kremlin has offered minor concessions to easterners by promising to reduce shipping charges to offset the tax hikes, but has no plans to change the new system, despite more protests being planned.

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