Friday, January 30, 2009

New Import Tax on Used Vehicles

The union of importers of used vehicles (Gremial de Importadores de Vehículos Usados) warned that buying a car would become more expensive if Congress approves a new "primera matricula" tax. The tax is included in the tax modernization package sent to Congress by the executive branch. In a document sent to various legislative caucuses, the union warned that approval of this initiative, which is facing its second reading in the legislature, affects not only the importers of vehicles but also consumers by raising costs. The union advises Congress to consider the proposal carefully and to reject it.

The secretary of the union says that vehicles are no longer a luxury but a necessity, since many people drive to work

The secretary cited an example of a collision damaged 2006 Honda with damage to the engine. Importation of this vehicle costs Q22,497.73, including freight and insurance. For this vehicle the import duty and VAT (Value Added Tax) paid was Q7,739.22. With the new charges and reforms in the proposed tax package, that same car would cost Q23,656.62 not including the VAT.

The basis for the tax will no longer be the invoice price but a price obtained from a table by the Superintendency of Tax Administration (SAT). The fee for the first registration of a vehicle would be 26 percent of the value of the vehicle, as determined by SAT, not the invoice. The executive branch proposes 30 per cent.

The proposed tax package for 2011 would double the road tax on vehicles, among other reforms. With this revenue, the government intends to finance part of the state budget this year so the government is urging its approval.

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