Chairman of the Automobile Importers Union Clarifies – What Implication will VAT Elimination have in Automarket Price Variation?
After the statement issued by the Government, auto-importers are having a happy day today. Tigran Hovhannisyan, Chairman of the Automobile Importers Union, informed the reporters of this at today’s press conference, asking however, that the Government finalized the started process, “Although the issue of value-added tax (VAT) has been resolved, but automobile importers should be separated from people. We want this request to be reachable for all bodies, up to president, that a new status was given to automobile importers, and the money, which will be reduced from our state budget due to elimination of VAT, maybe we would compensate by working in legal field. Currently, ten thousands of citizens sell cars, but only thousands of them are importers, and I may say, that they’ve paid hundreds and thousands dollars at customs service, but they have no future. This means, we need a status, either in form of licensing or a tax.”
Auto-importers are also concerned with the resolution, that they are entitled to import only one car from Russia, “Any importer will seek for new passports, and after the sale again VAT will be charged—16.67%, and it’s impossible to pay that tax amount after the purchase. Thus, again we’ll be called a thief, again investigative bodies will seek for us, again purchase prices will be suspected, again penalties will be implemented.”
According to Tigran Hovhannisyan, the issue stated by the Prime Minister, that charging of VAT is eliminated for simple citizens, and not for private entrepreneurs needs to be clarified as well, “Automobile importer may be an private entrepreneur, and it’ll turn out, that legal persons won’t have the right to import automobiles. This needs to be clarified. For instance, it’s another issue, whether we have the right to import cars by names of our relatives or not, or VAT will be charged again.”
According to the Chairman of the Automobile Importers Union Russian automarket is competitive, “We weekly spend millions of dollars in Georgian market, enrich Azerbaijanis, Georgians, and we build a cemetery in Armenia. After engagement with Eurasian Economic Union (EEU), first and foremost, I’d prefer that we developed machinery, and let Georgians, Turkish or Azerbaijanis try to purchase an automobile form us. As for Russian market, it’s rather competitive; it has internal production, which include such famous companies, as Toyota and Korean, American car producing companies. If we start importing cars from Russia, we’ll import up to 5 year old car, and not 15-20, which we import from Georgia. Why shouldn’t we import new cars, renew the auto park, and drive Toyota Corolla or other cars, i.e. we should leave Georgian market. Georgians import the same car from Russia and pay less taxes, not being a EEU member country, which was quite shameful and still is, until the barrier exists, that legal persons didn’t import cars.”
Then, in the example of a car he introduced the price difference, that would be in the market after VAT elimination, “2015-16 Mercedes C class car costs USD 24-25 thousand, last Sunday our importers sold it with USD 30 thousand, i.e. they paid USD 6 thousand at customs clearance. The same car next Sunday might have been sold by USD 24-25 thousand, you’ll see what benefit we may gain.”
By Razmik Martirosyan
