A REVISION in the tax coefficients levied on imported cars is expected to occur after a Supreme Court decision last Monday.
The decision paves the way for either a wholesale or a partial abolition of the discounts afforded on taxes levied on used vehicles that are imported from non-EU countries, such as Japan and Singapore.
In announcing the Supreme Court decision, its President Christos Artemides said that “where consumption taxes are concerned, importers and owners of used cars from non-EU countries are not entitled to tax parity with the owners and importers of cars from EU countries.”
The decision notes that “when the state levies consumption tax for imported used goods, it should take into consideration by comparison, the age of the used object as well as other factors so that it can levy the residue of the appointed tax for new imported goods.
“The state enforces its duty according to EU justice and the European Court’s interpretation on the issue.”
In spite of decisions which resulted from past Supreme Court recourses made by used car importers, the Supreme Court decided that tax coefficient discounts “do not apply to used cars imported from non-EU countries, since the state’s duty arises only from the entry agreement it signed with the EU.”
The Supreme Court emphasised that the tax discrimination “does not create unfair treatment in a way that would conflict with the Constitution”.
Commenting on the decision, Senior Customs Official in charge of legal issues Iakovos Antoniou said that it was “final, and in line with the position of the Customs Office”.
“It’s true more than 120 recourses were made by those who imported cars from non-EU countries.”
“However, these were not in line with EU law, despite their attempts to base their arguments on older Supreme Court decisions or European law,” he added.
Currently, Cyprus customs law states that if you import a car that is up to one year old, then you get a 15 per cent discount; if the car is between one and three years old, you get a 20 per cent discount; if it is from three to five years old you get a zero per cent discount; and if over five years old you pay a 25 per cent penalty.
According to the law, goods in free circulation in the EU can move from one member state to another without payment of further import duty.
Certain goods, such as used motor vehicles, are, however, subject to ‘excise duty’, even if they arrive from another member state of the EU.
“The EU prevents its member states from imposing a customs tax,” said Antoniou, but emphasised that “the EU does not bar its member states from levying a consumption tax if they so wish.”
