Taxes Target Used Car Imports

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The government is considering increasing taxes on used car imports, and encouraging auto companies to set up assembly plants in Cambodia.

Two models show off a Rolls Royce in Cambodia. KT/Mai Vireak

Kun Nhem, director-general of the General Department of Customs and Excise (GDCE), said at the Auto Show 2018 on Friday that higher taxes on used car imports would encourage more people to consider a new car, which would help the environment and be safer and more economical.

He did not say how big the tax increase could be.

“We don’t have a specific policy yet on adding taxes to used cars, but we are considering limiting old car imports,” he said.

“We will consider the date of manufacture of old cars.

“We won’t ban the import of used cars but for cars made before 2000 we will increase taxes to stop grey dealers from importing very old cars which impact the environment and affect consumers’ safety,” Mr Nhem said.

“Import taxes, VAT and special taxes for used cars are not changing.

“Old or used cars must pass technical inspections after paying taxes. The oldest cars are more frequently sent for technical inspections while new car inspections are conducted every two years,” he said.

Speaking to auto representatives from Porsche, Honda, Nissan, Isuzu, Ssangyong, Mitsubishi and Foton at the Auto Show, which concluded yesterday, Mr Nhem said the government was offering a 50 percent tax cut for manufacturers who assembled finished vehicles in the country.

He said that there were about 300 to 500 parts and components to assemble for one car.

“The cut of 50 percent in taxes is to support local people by giving them more work through manufacturing assembly, and to support and facilitate companies which assemble new cars in the country,” Mr Nhem said.

“Currently, for car imports across Asean there are zero taxes while the government is charging only the VAT and special taxes.”

Mr Nhem said Cambodia imported about 6,000 used and new cars per month. New cars were about 15 percent of total imports. Thus, he said the new car market would have more room and potential to grow.

“Most of the new authorised automobile dealers must work harder to raise consumer awareness of new cars,” said Mr Nhem, whose department gets about 40 percent of its total income from vehicle and machinery imports.

Michael Vetter, EuroCham’s automotive committee president and board member of the Cambodia Automotive Industry Federation, welcomed the government’s move.

He said that in the last three years, the automobile sector has risen rapidly which is a good sign for Cambodian people and its economy.

“Authorised dealers will not only distribute cars legally, but they also create jobs for Cambodian people and offer the right products to consumers,” Mr Vetter said.

“All authorised automobile dealers are complying with the law in Cambodia in terms of paying taxes to ensure the safety of customers.”

Shorn Phirom, business development manager of the Car4you Company, said the new car market would improve with the government considering a rise in import taxes on used cars.

“Now the government is giving priority to new cars rather than used cars,” Mr Phirom said.

Ngoun Keovattey, assistant to the CEO of Porsche, said her company and other authorised car dealers still had issues over competition from the grey market in terms of price and parallel imports.

“We pay full taxes while the grey market pays less,” she said. “Import taxes are now 135 percent.”

She urged people to consider new cars from authorised dealers because they would get more benefit regarding costs, safety and maintenance compared with grey dealers.

This article was originally published in the Khmer Times.

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