Kyrgyz Re-Exporters of Chinese Cars Will Soon Pay Higher Duties

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The Russian authorities have introduced additional customs duties for cars imported from Eurasian Economic Union (EAEU) countries, according to the Ministry of Economy and Commerce of Kyrgyzstan. The ministry says that the Russian government amended the rules of collection, calculation, payment and recovery of the utilization fee for wheeled vehicles and trailers. From April 1st 2024, all citizens importing cars into Russia which were previously customs cleared in the EAEU countries will have to pay an additional utilization fee. This fee is charged for the ecological recycling of the vehicle at the end of its service life.

“This approach will avoid situations where citizens and companies importing cars cleared in the EAEU countries receive unjustified advantages compared to car owners doing so in Russia and paying the taxes and fees established by law in full,” reads a statement on a Russian government website.

The EAEU includes five countries: Russia, Kyrgyzstan, Kazakhstan, Armenia and Belarus. The EAEU guarantees a single customs zone spanning the entire territory of these countries, meaning that import and customs clearance for a car in one of the EAEU countries means one can subsequently operate and sell it in any other EAEU country. Until now, Kyrgyz re-exporters of cars – mainly from China – have been successfully exploiting this loophole, as there is no utilization fee to pay when a car is cleared in Kyrgyzstan. As a result, cars imported from China and other countries cleared customs in Bishkek and were then freely shipped to automobile markets in major Russian cities. These cars imported to Russia from Kyrgyzstan are obviously cheaper than cars imported from other countries, including those imported directly by the manufacturer.

The leader among countries importing new cars to Russia in 2023 was China, while Kyrgyzstan ranked second, despite the fact the Kyrgyz Republic does not have its own car manufacturing factories. According to Russian customs data, 13,600 cars were imported from Kyrgyzstan to Russia in December of 2023 alone. In total, Kyrgyzstan exported more than 70,000 cars to Russia last year.

The so-called recycling fee was introduced by Russia in 2012, when the country joined the WTO. In August 2023, in order to protect Russian car manufacturers, the utilization fee in Russia was increased roughly nine-fold, forcing buyers to search for cheaper duty-free cars such as those imported via Kyrgyzstan.

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