The Verkhovna Rada of Ukraine has passed in the first reading Bill No. 9083 on the possibility for trading organisations to buy cars as goods rather than vehicles, Komersant Ukrainsky reports
“Finally, our draft law No. 9083 on improving the procedure for wholesale and retail trade in vehicles by business entities registered with the Main Service Centre of the Ministry of Internal Affairs has been adopted as a basis. There are 268 votes in favour,”
– wrote MP Yaroslav Zheleznyak in his telegram.
This draft law provides for deregulation and de-shadowing of the used vehicle trade market.
According to the Ukravtoprom association, the adoption of the law as a whole will make it possible to buy and sell vehicles as goods without registering them with the Central Service Centre of the Ministry of Internal Affairs and the TCC.
“Today, organisations trading in used vehicles, when buying back a car for resale, are required to account for it not as a commodity but as a fixed asset for their own use,”
– the statement said.
MP Danylo Hetmantsev noted that the used car market before the war was 1.7 million cars a year, and in 2023 it will be 780,000.
“This year, we expect 1.5 million, and only 2.5% of this is sold in white. The state receives an average of UAH 19.8 thousand from the sale of a white car. From the sale of black cars – 0. But there is an obstacle for the white market. The requirement to register a car with an intermediary with a bunch of unnecessary certificates. Cancellation of the meaningless state registration of used cars by a trading organisation for itself, even if it buys them as goods for further resale, will be the key to bringing the market out of the shadows, expanding the activities of white car traders and eliminating schemes that cause the budget to lose taxes,”
– hetmantsev said.
Used car trading – what will change
Before the law comes into force, used car companies are required to register cars for themselves after purchase. This requires a visit to a service centre of the Ministry of Internal Affairs and obtaining licence plates, as well as registering the car with the TCC and deregistering it after the sale.
According to MP Iryna Gerashchenko, draft law No. 9083 provides for the procedure for wholesale and retail trade in vehicles by business entities that are registered with the Main Service Centre of the Ministry of Internal Affairs.
According to the MP, during the war, state budget revenues from the automotive market have become the second largest after revenues from the oil trade.
The draft law proposes to exempt business entities engaged in wholesale and retail trade in cars and their component parts registered with the Main Service Centre of the Ministry of Internal Affairs from the obligation to re-register used vehicles if they are purchased for further resale.
“It will be enough for such firms to enter into two sale and purchase agreements: with the previous owner and the next one. And instead of re-registering the vehicle from the seller to the company, the owner will deregister it himself before transferring it to the business entity for further sale,”
gerashchenko explained.
In addition, the document provides for the introduction of electronic data exchange on vehicles.
These rules are in place in the West, where car dealers can buy used cars for further sale without any restrictions without having to re-register them for themselves, but rather register them for the end buyer, the MP added.
Instead, in Ukraine, when buying back a car, commission platforms do not enter into a formal sale and purchase agreement, but take a notarised power of attorney from the former owner. They re-register the car when they find a buyer for it. As a result, these transactions are not recorded anywhere, are not reflected in the company’s accounting records, and, accordingly, no taxes are paid on them.