Russia announces new rules for foreign vehicle assembly

Article by Christian Andrei, on December 4, 2010

Russian Development Minister Elvira Nabiullina has finally come to an agreement with her counterpart from the Industry and Trade Ministry over new rules for foreign vehicle assembly in Russia.

The revised rules indicate that foreign automakers that produce more than 300,000 vehicles each year in the country will be exempted from paying import taxes on auto components for eight years.

Under the present Russian laws, foreign automakers can take advantage of discounted rates of no more than 5%, compared to the standard rate of 5% to 15% that domestic manufacturers have to pay.

Nabiullina also revealed that there is a catch in the new regulations, as the 30% of cars made in the country under foreign badges have to be equipped with engines built in Russia.

Alexei Rakhmanov, head of the Industry and Trade Ministry’s Auto Industry Department, said that the government may annul several auto assembly agreements with auto producers that are not being put into action.

As an example, Rakhmanov cited one manufacturer, Ukrainian automaker Bogdan, which assembles buses in the Nizhny Novgorod Region.

It was also reported that the Russian government intends to keep import taxes on automobiles unchanged until 2014–2015. Foreign companies consider the importing of parts and assembly of automobiles in Russia to be profitable because the labor is cheaper and the customs duties on car part imports are low. [via autonews - sub. required]

Topics: russia, sales

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