Electric Vehicle Imports Under New Conditions: Why Russia Opposes Extension of Zero Duty

It is visibly evident that the number of electric vehicles in our country has increased in recent times. Both experts and drivers agree that the future belongs to these vehicles, as maintaining an electric car has become not only environmentally friendly but also a cost-effective alternative in light of the ongoing rise in fuel prices.

It should be noted that the increase of electric vehicles is included in the government's 2021-2026 program as a measure for sustainable and green economic development. For the implementation of this objective, importers of electric vehicles in Armenia are exempt from paying 20% VAT. Furthermore, until January 1 of this year, a zero customs duty was in effect for electric vehicle imports in the EAEU.

As a reminder, the draft amendments to Article 64 of Armenia’s Tax Code were adopted on June 7, 2019, exempting importers and sellers of all vehicles powered by electric motors from VAT. This legal provision was eventually extended until January 1, 2024. Between 2018 and 2020, over 20 charging stations were installed in almost all regions of the republic, and a primary map for the installation of charging stations was developed. Currently, there are more than 80 charging stations, and already around 5,200 electric vehicles had been imported from 2019 to 2021.

In order to achieve the long-term goals for electric vehicle imports and operation, the EAEU discussed extending the zero customs duty exemption, but this exemption was terminated on January 1, 2022, at the initiative of Russia.

It should be emphasized that although there is no electric vehicle manufacturing in any EAEU country, it is desirable for the governments of member states to facilitate the import and operation or resale of electric vehicles, which is why the zero customs duty exemption was originally provided.

Russia justifies its decision not to extend the zero customs duty exemption by stating that none of the EAEU countries has proposed extending this exemption. However, Belarus has proposed extending the zero customs duty on light passenger vehicles powered by electric motors until December 31, 2023, and this is currently under discussion within the EAEU.

The Ministry of Environment informed Auroranews that Armenia has also put forward proposals regarding the development of the sector within the EAEU. For example, the increase in charging stations for electric vehicles, a mandatory requirement for a certain number of taxis to operate with electric cars, and so on. Currently, a proposal has been received from the EAEU to develop a concept for sector development. Work has begun on this, but the extension of customs duty exemptions is unlikely to happen.

Russia's stance on electric vehicle imports has several reasons: firstly, Russia is a major oil superpower and has a large production of gasoline-powered vehicles instead of electric ones.