Interest Groups Try to Put Brakes on Commercial Vehicle VAT Rise ({{commentsTotal}})

Source: Photo: ERR

Interest groups are fighting a Cabinet bill aiming to restrict the use of work vehicles for personal purposes.

Currently, the government gives a full tax break on VAT when a company buys a car. The bill would limit the discount to half, and a maximum of 2,000 euros, although there would still be a number of exemptions, such as for taxis and cars used for driving lessons, as well as vehicles bought for resale and those used solely for business, reported ETV.

"Our analysts have calculated that the state could expect [to improve tax receipts by] around 40 million euros annually from this measure. Next year the amount will certainly be smaller since the planned amendment would be implemented in July. It will certainly cause certain changes to consumer behavior. More cars will be purchased for business purposes before July 1," said the Finance Ministry's duties and excise department director Marek Uusküla.

The bill, which is connected to the 2014 state budget, and was submitted to Parliament last week, has elicited several letters of opposition, with the Taxpayers Association leading the resistance.

Among their complaints, the group expressed disapproval that interest groups were not involved in drafting the bill, that the conditions are vague, and that a new requirement to keep a mileage log would increase employees' workload. Moreover, the group said, tax manipulation to allow personal use of vehicles would still be possible after the reforms, and therefore the government's estimates of additional tax revenue may not hold true.

There are 81,500 vehicles registered for occupational use in Estonia. Estonia does not have a car tax.

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