Friday 2 December 2022

Used Electric Vehicles To Be Exempt From Tax

Government will eliminate in a year the tax exemption for hybrid vehicles for scarce impact in 20 years

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2 December 2022 - At The Banks - BCCR

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In an effort to limit the emission of polluting gases, the government signed on Wednesday several executive decrees, one of which exempts used electric vehicles from the payment of the excise tax upon entering the country.

In the photo, in Los Anonos, Sabana Sur, the Compañía Nacional de Fuerza y Luz (CNFL) – a subsidiary of ICE – plant were electric vehicles are used. Photo: Marcela Bertozzi

The decree was signed by the Minister of Environment and Energy (MINAE), Carlos Manuel Rodríguez, and the Minister Public Works and Transport (MOPT), Rodolfo Méndez,  the Minister of Finance, Rocío Aguilar and President Carlos Alvarado.

The decree that extends the benefit to used electric vehicles only –  those that operate with electricity or other technology without emissions and without a combustion engine – whose age is equal to or less than 5 years old.

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The benefit covers both automobiles, motorcycles, cargo transport vehicles, minibuses and buses.

The exoneration will only apply to vehicles with a CIF value at customs of US$30,000 and under. The limit, however, will not apply to public transport vehicles or freight transportation.

In addition, the used electric vehicles will not be subject to vehicle restriction and may use blue parking spaces within public parking lots, as well as supermarkets, shopping centers and other private parking, as stipulated in Law No. 9518, Incentives and Promotion for Transportation Electric, of January 25, 2018.

More: ICE Prepared For Electric Vehicles

The decrees will be in effect once it is published in the official government newsletter, La Gaceta; which publication scheduled for next week, said first lady Claudia Dobles who coordinated the process that led to the drafting and signing of these decrees as part of the mobility projects promoted by Casa Presidencial (Government House).

Electric filling station in front of ICE building in La Sabana norte

Dobles emphasized that the exemption for cars with a CIF value equal to or less than US$30,000 is specifically to make this type of ca accessible to the middle class.

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“This is aimed at people for whom the payment of new and luxury electric vehicles in the range of US$60,000 or more is inaccessible,” he said.

Bad news for hybrids

Apart from the decrees benefiting electric vehicles, decrees were signed to eliminate, in one year, the tax exemption on hybrid vehicles (vehicles that use electricity and internal combustion engine to drive) that has been in place for importers of hybrids.

The Wednesday signing thus repeals Executive Decree number 33.096 of March 14, 2006,  ‘Incentivo al uso de vehículos Híbridos-Eléctricos’ (Incentive to the use of Hybrid-Electric vehicles), which exempted them from the excise tax upon entering Costa Rica.

According to data by the Dirección de Energía del Ministerio de Ambiente y Energía, between 2006 and 2018, only 1,844 hybrid vehicles applied for the tax exemption benefit. ANd according to statistics, hybrids do not exceed 0.1% of the circulating vehicle fleet and, therefore, has generated an impact much lower compared to the all-electric technology in terms of improving air quality and air quality, and emissions of greenhouse gases.

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