Depreciation on Duty-Free Imports Faces no Change

While removing the 30pc depreciation applied to customs duties on imported second-hand items, the government will retain the 10pc annual depreciation on imported items with duty-free privileges.

A directive issued by the Ministry of Revenues on May 15, 2019, has fully lifted the uniform 30pc depreciation applied across imported used items, regardless of their age. However, the directive, signed by Adanech Abebe, minister of Revenues, left the depreciation on used items with duty-free privileges unchanged.

The 10pc annual depreciation applied to imported items with duty-free privileges will remain in place, according to Addis Ayele, price valuation director at the Ministry of Revenues, which collected 163.3 billion Br in revenues in the first 10 months of the current fiscal year.

While levying customs duties on imported used items, customs officials of the Ministry have been deducting 30pc depreciation on the value of the items, according to the former directive. They were also applying 10pc annual depreciation on used items imported by expat employees of non-governmental organisations and embassies and by those that are entitled to duty-free rights. The depreciation is applied when they transfer the properties to third parties.

The new procedure outlined by the directive has already caused a price escalation in the second-hand vehicles market around the capital.

Since last Thursday, the price of used imported vehicles has drastically increased with a minimum rise of 80,000 Br depending on the model and brand, according to the car dealers Fortune spoke to. Most of the car dealers have been hoarding their vehicles with the anticipation that prices would go higher.