The Committee approved the draft law "On Amendments to the Tax Code of Ukraine regarding the stimulation of the development of the used goods market", which proposes to legalize the sale of used cars through official car dealers, as well as to change the structure of tax revenues from the resale of such vehicles. The adoption of this draft law (No. 3046) will bring the car market out of the shadows, ensure transparent and competitive conditions for official dealers in the used car resale sector, and ensure stable additional revenues to the state budget.
Currently, the vast majority of car purchase and sale transactions in Ukraine are carried out directly between individuals through trading organizations that have the right to issue reference invoices, or through intermediaries in the form of commission platforms. The share of such transactions is up to 95% of the total number, while in Europe more than two thirds of all used cars are sold through official dealer networks. Also, such changes will bring Ukrainian legislation in the field of taxation of transactions with used goods in line with the norms of the European Union.
"The sale of used cars through official dealer networks means additional jobs for service technicians due to the need to expand the service capacities of enterprises, as well as sales managers for used cars. This also means additional income related to the provision of financial and insurance services for buyers, which, in turn, increases revenues to the country's budget," the committee notes. In addition, in European countries, more than 60% of dealer enterprises' income is generated precisely through the sale of used cars, spare parts, and service.
The draft law provides for the introduction of fair application of value added tax to transactions in the used goods market, including used vehicles, which consists of taxing marginal income, that is, the difference between the sale price and the documented purchase price of the used goods. It also provides for the simplification and transparency of the procedure for forming the sale price of used goods for tax purposes. "Taking into account current sales volumes and their growth potential, the average level of market prices for used cars, as well as the level of market operators' margins from 3 to 10%, we can predict additional budget revenues from VAT and corporate income tax in the amount of 500 million to 1 billion hryvnias annually," the authors of the draft law state.
