Used Car Law Still Under Review

TIRANA, May 16 – One month after the establishment of a working group to review the tax on the sale of used cars, no solution has been achieved to amend the law which has blocked the car trade market. Finance Ministry sources say they are examining all possible solutions to amend the law without violating EU directives. The working group is made up of experts from the customs, tax, road, and traffic directorates. The initiative to review the law came after Prime Minister Berisha reiterated his stance on the need to review the tax on the sale of used cars, saying that the current tax had blocked the market, and calling on the Ministry of Transportation to find a suitable solution which would respect both the environment and the market. Since mid-2010, when a new law which increased taxes on the sale of used cars took effect, the sale of cars under legal contracts has declined; as car owners are resorting to authorization or donation practices to sell their cars. The Ministry of Finance’s data show that tax on the sold preowned cars dropped by 7.1 percent to 2.6 billion lek in 2010. The tax varies depending on the car’s horsepower, years of usage from the moment the customs duty has been paid, and the kind of fuel it uses. The new tax is calculated by multiplying the car’s number of cylinders, with a fixed coefficient of 0.5 for each year of use and a fixed tariff of 25 Lek for diesel and 20 lek for petrol. In this way, the owner of a car with an engine of 2000 cc imported in 1998 will have to pay a customs duty of 300,000 lek (3,000 USD) if selling the car, but only 50,000 lek (500 USD) if the car has had its customs import tax paid in 2008. These changes to the national tax system were aimed at discouraging the use of old cars in Albania and meeting the Stabilization and Association Agreement ‘s (SAA) commitment to removing fixed-rate taxes for imported used cars from EU member countries.