The government moved on Thursday to ban tens of thousands of Armenians from registering their cars abroad -- and neighboring Georgia in particular -- to pay significantly lower taxes.
Under the existing Armenian legislation, a car owner has to pay customs and value-added taxes worth 32 percent of the market value of their imported vehicle in order to obtain license plates. Cars registered abroad can qualify as “temporary imports” and be exempted from these duties.
Many Armenians have for years made use of this legal loophole by registering their cars with road police in Georgia, where import tax rates are considerably lower than in Armenia. The practice is especially widespread in the country’s northern regions bordering Georgia. It is also not uncommon among luxury car owners in Yerevan.
According to Armen Alaverdian, the deputy head of the State Revenue Committee (SRC), as many as 44,000 vehicles, or more than 10 percent of Armenia’s car fleet, presently carry foreign license numbers. He said the vast majority of their owners are Armenian citizens.
Alaverdian publicized the data after a government meeting that approved draft legal amendments abolishing the “temporary import” arrangement. He said the measure, which needs to be approved by parliament, would not only boost the government’s tax revenues but also limit imports of cheap and old cars.
“Armenia must not become a car cemetery,” Alaverdian told a news conference. “What are we going to do with those cars in the future?”
Some local motorists interviewed by RFE/RL’s Armenian service found this explanation unconvincing, saying that the government should instead cut what they see as exorbitant car taxes.
“I use Georgian license plates because of the illogical duties set by our government,” said one of them. “This temporary import thing is very convenient, even if I have to drive to Georgia [to renew the registration] and come back every month.”
“That’s better than paying customs charges here,” he added. “The fee for a five or six-year-old car could be as high as $9,000.”
“I bought a Volkswagen in Georgia for about $6,000 and was then told at our customs that I must pay $2,770 plus some additional fees,” said another car owner. “So I decided to drive it with Georgian license plates.”
“I can not afford to pass through the Armenian customs now,” claimed another Yerevan resident. “I planned on using Georgian license plates until raising the necessary sum. It’s worth almost 50 percent of my car’s market value in Georgia.”
Asked what he will do if the National Assembly approves the government bill, he said, “I’m not sure, I might just take it back to Georgia and sell it there.”