Last week, it became known about the government’s initiative to significantly increase revenues from the military tax. Government officials propose not only to increase the current rate for individuals from 1.5% to 5%, but also to further expand the scope of its application.
Among other things, Ukrainian leaders want to introduce a 15% military tax on the acquisition of movable property (cars subject to the first state registration in Ukraine). In other words, if the government’s draft law No. 11416 is supported by the Verkhovna Rada, when buying a car in a car dealership and registering it for the first time, you will have to pay an additional 15% of its value.
These tax initiatives have upset Ukrainians… who went to car dealerships en masse to buy a car before the additional fee was introduced. According to Oleh Nazarenko, CEO of the All-Ukrainian Association of Automobile Importers and Dealers, buyers bought all available cars from car dealerships on Friday and the first half of Saturday. Car dealerships are now empty as Ukrainians have withdrawn their savings and are trying to buy existing cars as soon as possible to avoid paying an additional 15% military tax.
The UAAAI believes that the government’s initiatives will harm the industry. The effect of the introduction of the military tax on car purchases may be small and short-lived. After the increase in taxation, sales will stop and instead of increasing budget revenues, the government will get a drop. After all, if sales decline, the current contributions (5%) to the Pension Fund, which are still paid by buyers, will also decrease. A tax burden of 20% when buying a car is already a large amount that buyers will take a long time to get used to, according to the UAAIA.
Source: autoconsulting
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