On the draft Law of Ukraine on the amendments to subdivision 5 of section XX "Transitional provisions" of the Tax code of Ukraine concerning stimulation of development of the market of used vehicles.

Excise tax - an indirect tax, which is set on highly profitable and monopolistic goods and withdraws the excess profits derived from the sale of such products.
The experience of EU countries shows that the excise duty is established on highly profitable products such as tobacco, alcohol, luxury items, and in rare cases on the auto.
According to the Association of European car manufacturers ACEA (European automobile manufactures association) the average number of cars per 1000 people in Europe is around 487 PCs, in Ukraine this figure is less than 2.5 times and is about 201 vehicles per 1,000 people. The average age of cars in Ukraine is about 18.2 years while in Europe – 8.6 years, the fleet of our citizens requires a significant upgrade.
At the end of 2014 the fall of Ukrainian economy amounted to 7%, the inflation rate of 24.9%, real incomes fell by 54%. Worldwide for out of the crisis using the stimulation of development of small and medium business through the methods low interest rates on loans and lower tax pressure on them.
However in Ukraine in 2014 were used the extensive measures that have resulted in increased tax burden, and was not designed to stimulate business development, and stabilization of the state budget.
As a result, today most of the key sectors of the economy, there is today on the brink of survival, including the automotive industry. According to the Association of automakers “Ukravtoprom” the implementation of vehicles in 2014 compared to 2013 decreased by 126937 units or 54.5 %. The state budget revenues from payment of excise duty for the supply of motor vehicles in 2014 was worth 904, 2 million UAH. what 258,4 mln. or 22% less compared to 2013.
Objective reasons for the decline of the industry is the devaluation of the national currency, and with it a significant reduction in real incomes and purchasing power of citizens. Very low demand for cars has led to a significant reduction of jobs in sales and production, and with it the reduction of receipts in the state budget. Consumers are not able to buy new imported cars for its high value in the national currency and can't buy imported used cars through high excise tax rates, making the price uncompetitive.
According to the State fiscal service in 2014, Ukraine imported components that are used for the industrial Assembly of vehicles for the sum of 153,3 million. or about 1.6 billion UAH. According to the Association of automakers “Ukravtoprom”, Ukrainian companies were made 28751 vehicles. On average, 1 made the car in Ukraine the share of foreign components is about 5.4 thousand. Sharp hryvnia devaluation in 2014-2015, made the cost of domestic cars are not available for most of our citizens.
During January-August 2015, Ukrainian enterprises produced 2914 cars.
In such a situation the citizens of Ukraine, especially in the border areas, began to buy used car in Europe and use them on the territory of our country without paying relevant taxes and fees that must be paid when buying a car on the territory of Ukraine. Become widely spread schemes of tax evasion through the regime of temporary importation by non-residents and use the car in the customs transit regime.
According to the Customs code of Ukraine, the transit cannot exceed 5 days if the move occurs within one customs office and 10 days in the area of two or more customs offices, with the exception of the case stipulated by article 192 of the Customs code. To extend the time transit vehicles are bought bogus medical certificates and bogus conclusions of the stations, that generates considerable corruption in the state bodies. Shadowing this sector caused by high rates of excise tax, results in significant losses to the state budget.
According to experts, the growth of Ukraine's economy in the years 2016-2017 will be about 2% annually. This actually means that the population will not have the financial resources to purchase domestic cars, even at the price level of 2015.
However, paragraph 1 of the Concluding provisions of the bill regarding the entry into force of this Act from the first day of the month following the month of its publication, is not consistent with the requirements of paragraph 4.1.9 of article 4.1. article 4 of the Tax code of Ukraine, which stipulates the principle of stability of tax legislation of Ukraine. Its content changes in any elements of taxes and duties can not be made later than six months before the start of the new fiscal period which will be new rules and rates. Taxes and fees, their rates and tax benefits may not be changed during the budget year.
Item 2 of the Concluding provisions of the bill on the harmonization of the Cabinet of Ministers of Ukraine of their normative-legal acts into conformity with this Law and adopting normative legal acts necessary for implementation of the Law (within one month from the date of entry into force of this Law) is legally incorrect, since the implementation of the provisions of this Act shall be subject to adoption by the Government in future regulations.