The government is weighing a shift in tax policy that would remove the double VAT applied when used cars move between business buyers. This topic came to light during a live stream on the Russian automobile sector association’s YouTube channel, where Alexei Podshchekoldin, the vice-president of the Russian Association of Automobile Dealers (ROAD), explained the discussion surrounding the proposal.
Podshchekoldin noted that the idea of eliminating the extra VAT in transactions between legal entities gained support at the highest levels of government. Igor Boytsov, the ministry’s newly named automotive industry curator, indicated that a move toward ending double VAT in these deals is under consideration. Yet the ROAD leader cautioned that no formal document has been published to confirm an official decision on the measure.
During his remarks, Podshchekoldin stressed that bringing order to the used car market could open doors for official dealers to participate more actively. He suggested that market expansion to several million units annually could be possible if regulatory barriers are lowered. Such growth would likely boost VAT and other tax receipts, helping meet state revenue targets while increasing market transparency and consumer protection.
In late discussions, it was noted that last year a draft bill was developed in the Federation Council proposing the abolition of double VAT on the resale of used vehicles between dealers, as reported by TASS. The policy proposal has since sparked debate among industry stakeholders who are weighing potential fiscal impacts and administrative considerations.
Under the current framework, VAT is typically included in the price of a new car at the point of first sale. When a dealer purchases a used car from a private seller or another non-dealer and then resells it to another legal entity, the second party may face VAT obligations on the full selling price. In such cases, the VAT paid can sometimes be deducted only from the margin of the purchasing entity, creating what is perceived as double taxation and hindering market fluidity.
Discussions have also touched on enforcement and compliance concerns. ROAD members have proposed clarifying how any new rule would be administered to ensure consistent treatment across regions and market participants. The goal is to reduce red tape while preserving robust tax collection and fair competition among dealers, private sellers, and corporate buyers. Industry observers highlight that the outcome will depend on legislative wording, transitional provisions, and how the government plans to verify and certify used-vehicle transactions.
There have been references to penalties and enforcement mechanisms tied to related issues. In earlier talks, ROAD suggested imposing a substantial penalty for attempts to manipulate odometer readings, a measure intended to deter fraud and protect buyers from overvalued or misrepresented vehicles. These proposals reflect a broader push to modernize the used-car market through clearer rules, stronger oversight, and more transparent pricing. The report from TASS on the Federation Council bill proposals is part of that ongoing coverage.