Monday, May 29, 2023

Reforms to vehicle property tax law will eliminate incentives for electric cars

The government has proposed a legal reform project of the vehicle ownership tax that would eliminate the currently applicable tax exemption incentives for electric vehicles. This tax liability is canceled annually on payment of stamp duty.

In the proposal that the executive power presented to the Legislative Assembly to reform the vehicle property tax, the repeal of articles 10 and 13 of Law 9518 on incentives and incentives for electric transport, which was published on 6 February 2018 and reformulated on 3 June Was gone, 2022 with a tentative.

Article 13 of the law states that electric vehicles that are locally produced or assembled will be exempted from paying property tax for a period of five years from the moment of their nationalization or from the moment of their production.

Currently, electric vehicles are exempt from payment of this tax which is applicable as follows: 100% exemption for the first year; 80% for the second; 60% for the third, and so on till full tax is paid in the fifth year.

The benefit on property tax received by electric vehicles, which is part of the stamp duty, is received at the time of paying for the right to operate. These exemptions were extended with changes to the law enacted in 2018, which went into effect on June 3, 2022.

In this regard, Silvia Rojas, Executive Director of the Costa Rican Association of Electric Mobility (Asomove), assures that the exemption for electric vehicles that will be implemented in Costa Rica from 2018 is the key to enable people to acquire them. vehicles, so who urged that the text be revised to retain them.

“We are going to talk with executive branch officials and deputies and deputies to better analyze the issue to keep them. The incentives are fundamental, we believe it is appropriate that this repeal be reviewed and Hopefully changes can be made to the text as needed to maintain the incentive,” Rojas said.

The proposal submitted by the executive also considers the abolition of Article 10 of Law 9518. In the latter, it said that the tax benefits for electric vehicles (value added tax (VAT), selective consumption and customs duty) may not sum up. over an amount equal to twenty-four base pay.

Selective consumption tax, which represents 30% of the import price of an electric car, is 100% waived till June 2025. From then on, the rate would increase by 7.5 percentage points every three years until the current rate of 30% of that tax is reached.

For VAT, earlier this year, the new plan included in the temporary law to come into force in 2022 includes a 1% VAT rate during the first year (2023). The tax would increase by one percentage point to 13% in 2034.

The exemption of customs value tax, representing 1% of the good, is total for all vehicles during the first three years of validity of the temporary law. Thereafter, the rate will increase by 0.25 percentage points every three years till it reaches the current rate.

As of April, the number of electric vehicles in Costa Rica reached 8,001 units, which are distributed among 5,420 automobiles, 1,105 motorcycles and 1,476 specialized equipment, including golf carts, ATVs, forklifts and work vehicles.

Only 1,501 new electric vehicles were registered in the first four months of this year, according to data from the Ministry of Environment and Energy (MINAI), the entity charged by law with accounting for this information. This number, in itself, is higher than the same periods in 2020, 2021 and 2022, which brought the total to 1,435.

Nation World News Desk
Nation World News Desk
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