Customs authorities strengthen regime on temporary import of cars

TIRANA, Sept. 2 – In a bid to fight smuggling of cars, Albania’s customs administration has issued an instruction tightening procedures on the temporary import of vehicles (TIV) regime. The ordinance, which entered into force on September 1, 2014, sets a six-month deadline in every 12-months for the circulations of cars registered abroad also tightening penalties for owners if they don’t exit Albania after the six-month period or register their vehicles with customs authorities if they intend to circulate in Albania.
“Foreign vehicles being imported into Albania under the temporary import regime, commonly seen on the streets of Albania with foreign registration plates, have not only avoided paying the correct tax and importation, but have also avoided the annual inspection process and in many cases, if not all, they are uninsured. This poses not only a financial burden on the rest of the population who have correctly registered vehicles, but is also a threat to public safety,” says UK-based Crown Agents which has been hired by the Albanian government to increase customs revenue by fighting corruption and smuggling.
The joint Albanian Customs-Crown Agents operational teams have undertaken several inspections at the premises of car dealers, scrapyards, as well as private car owners, since February 2014. In the last six months, these joint teams have seized around 400 vehicles which had entered Albania under the temporary import regime, but had never left the country. Except collecting the respective customs duties, customs authorities have also managed to collect a considerable amount from the penalties that have been issued.
Car imports slowed down in 2013 when the Albanian economy grew by only 0.4 percent, the lowest rate in the past 16 years. Data published by the country’s state statistical institute INSTAT show car imports, overwhelmingly dominated by second-hand cars, registered a double-digit decline, also affected by fuel prices standing at a record high.
INSTAT data shows some 50,166 cars worth 20 billion lek (Euro 142 million) were imported in 2013, down from 56,539 cars, worth 17,994 (Euro 126 million) in 2012, hinting an increase in imports of new cars.
In the final quarter of 2011, when customs duties were lifted significantly lowering car prices and a new law on annual taxes discouraging the use of old cars entered into force, a record 23,503 cars were imported, six times more compared to the final quarter of the previous year.
Having to pay only 20 percent in value added tax, some 51,894 cars were imported in 2011, more than treble compared to 2010.
While the new law lifting customs duties cut second-hand car prices by at least 30 percent, Albanians increased purchases for cars produced in the past 5 to 10 years, also because of the new tax system considerably increasing annual fees for older motor vehicles.
The removal of customs duties was accompanied with a new taxation system based on cars’ age, the engine capacity and the kind of fuel they use. Car taxes which since September 2011 have seen a sharp rise for second-hand cars more than 10 years old were halved in a move taken just two months ahead of the June 2013 general elections.
Meanwhile, car concessionaires operating in Albania have warned they are on the brink of bankruptcy with their sales having sharply fallen since a new law lifting customs duties on second-hand cars entered into force a couple of years ago. In an open letter to government in late 2013, the Association of 16 car concessionaires operating in Albania says the import of new cars has dropped by 60 percent since changes to the national taxes made import of second-hand cars cheaper and easier in July 2011.