APIA: The newly proposed tax changes will affect the car market
The relevant stipulations that APIA refers to are the non-deductibility of VAT in car acquisitions, limited deductibility of service-based expenses (30%) and full non-deductibility of repair/maintenance expenses.
Non-deductible VAT liability applicable for car acquisitions will pave the way to a sharper decline in sales of new cars. Leasing companies will not be able to recover the VAT applied to payment rates. “This will determine the increase in leasing costs, and consequently the collapse of leasing companies. These tax law changes will also result in an increase of number of cars recovered from bad debtors”, APIA said.
The limited tax exemption of car service expenses (30%) will lead to a contraction of activity in this segment.
“We consider that the Ministry of Finances is proposing in fact a lockdown of the car industry and of its adjacent sectors (maintenance, service, leasing, insurance)”, said APIA.
Non-deductible VAT liability applicable for car acquisitions will pave the way to a sharper decline in sales of new cars. Leasing companies will not be able to recover the VAT applied to payment rates. “This will determine the increase in leasing costs, and consequently the collapse of leasing companies. These tax law changes will also result in an increase of number of cars recovered from bad debtors”, APIA said.
The limited tax exemption of car service expenses (30%) will lead to a contraction of activity in this segment.
“We consider that the Ministry of Finances is proposing in fact a lockdown of the car industry and of its adjacent sectors (maintenance, service, leasing, insurance)”, said APIA.