Customs Duty Rates for Imported Vehicles to Change from January 1

Starting January 1, 2020, the customs duty rates for vehicles imported by legal entities from countries not part of the Eurasian Economic Union (EEU) will change. The calculation of customs duties will depend on the vehicle's customs value, release year, and engine displacement.

The process will be carried out in accordance with the EEU Council's decision No. 54 dated July 16, 2012, set out for commodity codes in the customs tariff, while VAT will be calculated according to the tax code. As before, an environmental tax will also be levied as per Article 171 of the Republic of Armenia's tax code.

To accurately calculate customs duties, it is crucial to pay attention to the commodity code of the vehicle in the external economic activity commodity nomenclature, which will indicate the applicable customs duty rates based on each vehicle's release year and engine displacement.

For instance, if a legal entity imports a vehicle in 2020 with a customs value of 7800 euros, an engine displacement of 2500 cm³, and up to 3 years old, the customs duty will be calculated at 15% of the customs value, resulting in 1170 euros (7800€ x 15% = 1170 euros). The VAT will then be based on 20% of the sum of the customs value and customs duty, totaling 1794 euros ((7800€ + 1170€) x 20% = 1794 euros). There will be no environmental tax because the vehicle is less than 5 years old. Thus, the legal entity will pay a total customs charge of 2964 euros equivalent in AMD (1170€ + 1794€ = 2964 euros).

For vehicles older than three years, customs duties also take into account engine displacement. This means the customs duty is calculated from the customs value at the specified percentage but not less than the product of the engine displacement and the established rate.

Consider the case where a legal entity imports a vehicle valued at 7800 euros, with an engine displacement of 2500 cm³ and a release year of 6 years. In this case, the customs duty is set at 20% of the customs value but not less than 0.44 euros per cm³ engine displacement (Formula 1: 7800€ x 20% = 1560 euros, Formula 2: 2500 cm³ x 0.44€ = 1100 euros). Therefore, the calculation will proceed as follows: 7800€ x 20% = 1560 euros. Thus, the customs duty will be 1560 euros, since the amount calculated under the value rate is higher than the amount calculated based on engine displacement. The VAT will amount to 1872 euros based on the calculation ((7800€ + 1560€) x 20% = 1872 euros). The customs duties and VAT together will result in a customs charge of 3432 euros equivalent in AMD (1560€ + 1872€ = 3432 euros). Don’t forget to add the environmental tax, which is 2% for a 6-year-old vehicle (7800 x 2% = 156 euros). Consequently, the legal entity will pay a total equivalent to 3588 euros in AMD (3432€ + 156€ = 3588 euros).

For vehicles older than 7 years, customs duties are determined based on the product of engine displacement and the established rate. For example, for a vehicle with a customs value of 7800 euros, an engine displacement of 2500 cm³, and an 8-year release time, the established rate for engine displacement is 2.2 euros per cm³. Thus, the customs duty will amount to 5500 euros (2500 cm³ x 2.2€ = 5500 euros). The VAT will be calculated using the already known formula ((7800€ + 5500€) x 20% = 2660 euros), and together with customs duty, it will form a customs charge of 8160 euros equivalent in AMD (5500€ + 2660€ = 8160 euros). An additional 2% environmental tax will apply (7800€ x 2% = 156 euros). As a result, the legal entity will pay a total customs clearance fee equivalent to 8316 euros in AMD (8160€ + 156€ = 8316 euros).

It is worth noting that the customs value of a vehicle is determined in accordance with Chapter 5 of the EEU Customs Code. It is also important to know that if a legal entity imports a vehicle in 2019 and registers the