OEMs will receive subsidies as compensation for duty increases on components

OEMs will receive subsidies as compensation for duty increases on components

Kommersant – The Ministry of Industry and Commerce has prepared a draft of new rules on subsidies for car makers. The amendment concerns the compensation payments for the 5-10% rise in rates on car component imports as of July the 1st. Although the changes in duties were mentioned in Russia’s accession parametres to WTO, the participants of industrial assembly agreements were given assurance on not experiencing any detoriations on the conditions of their projects. However, as it’s already clear: the launch of the mechanism will delay.

Customs duties on imports of car components to Russia will increase from 01.07.2018 onwards, under the terms of accession to WTO. The Ministry of Industry and Commerce will have to compensate these expenses for companies who have valid industrial assembly agreements, according to the federal law (№190), concerning some measures of state support for certain categories of manufacturers of motor vehicles, their components and units. Car manufacturers are promised compensation for expenses caused by the increase in customs duties on imports as of the aforementioned date, under the terms of the law.

Additional subsidies will be paid monthly, the performance indicators of which are planned to be determined individually for each recipient. In essence, the compensations are guaranteed as long as the terms of the industrial assembly agreements are fulfilled. In case the terms are violated, the subsidies will be returned to the federal budget in full, as highlighted in the document. Meanwhile, despite the fact that the increase on duties due to the agreement with WTO had been on the cards for many years, the Ministry of Industry and Commerce has drafted the decree with a serious delay. Although the increase in duties will come into force as of July the 1st, the new document will only pass the stage of public discussion on July the 5th.