“Customs Department to Modify Tax Brackets and Exchange Rates for Imported Vehicles”

2023-04-24 21:00:36

Barring surprises, the Customs Department should soon modify the tax brackets applicable to new and used imported vehicles, as well as the exchange rate to be taken into account for the calculation of customs duties referred to as the “customs dollar by the authorities.

This was confirmed to L’Orient-Le Jour by Sélim Trad, adviser to the Association of Automobile Importers (AIA) and Elie Azzi, President of the Union of Used Car Importers. However, they did not advance on the content of the upcoming changes, preferring to wait for them to be formalized by the customs administration. Elie Azzi said that the union he leads had a meeting scheduled for Tuesday with the Customs Directorate to discuss the details of the implementation of this measure approved last week by the outgoing Council of Ministers.

According to the text of the decision that we have been able to consult, the executive has indeed given the green light to a modification of these tranches which date from the time when the old official parity of 1,507.5 pounds for one dollar was still in force. The Council of State also approved the maneuver. These new tranches should in principle reflect the reality of the customs dollar rate.

The Constitution usually reserves to Parliament the prerogative to intervene in matters of taxation. But the latter authorized the government in 2018 to intervene for a period of five years in the customs field (Law No. 93 of October 10, 2018), a competence that the cabinet then transferred to the High Council of Customs.

Probably multiplied by 60 in May

The value of the Lebanese pound began to collapse in 2019 and the old official exchange rate was completely overtaken by that practiced by the money changers – legal and illegal – in the market, which is around 97,000 pounds for one. dollar for a few weeks. However, it was only at the end of last year that the authorities began to gradually pass on this depreciation to taxes and duties.

For customs duties, the customs dollar rate was set at 15,000 pounds for one dollar on December 1, 2022, then at 45,000 on February 1 and finally at 60,000 last week. It must be raised to 90,000 pounds for one dollar in May, as also decided by the executive. However, car importers have so far benefited from a lower customs dollar than that applicable to other goods which are not exempt (8,000 and then 15,000 pounds to the dollar since last week, all depending on the shipping date).

At the time of the old official parity, customs imposed that individual cars with a value of less than 20 million pounds were taxed at 20% by customs and that those whose price exceeded 20 million pounds were taxed at 50%. These 20 million LL then corresponded to 13,333 dollars, whereas they are now only worth 206, taking into account the current market rate, and 1,333 dollars, according to the new official rate of 15,000 pounds applicable since February 1st.

Importers of new cars have thus argued that maintaining the old tranches amounted to taxing virtually all vehicles imported at 50% by customs and have called for adjustments to the level of the customs dollar. With the expected modification, the tranche of 20 million will have to become 800 million if it is aligned with the current customs dollar (multiplied by a factor of 40) and 1.2 billion pounds if the customs dollar is increased once more in May. These two amounts are equivalent to $13,333.

In the eyes of part of public opinion, importers of new and used cars are not to be pitied and would have largely benefited from the delay of the authorities in amending the exchange rate taken into account for the calculation of taxes and duties. to import low-cost vehicles and boost their margins at the time of resale. A reproach which remains for the time being at the stage of a simple presumption on the judicial level.

Barring surprises, the Customs Department should soon modify the tax brackets applicable to new and used imported vehicles, as well as the exchange rate to be taken into account for the calculation of customs duties referred to as the “customs dollar by the authorities. This was confirmed to L’Orient-Le Jour Sélim Trad, adviser to…

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