The Ministry of Finance approved on Monday new facilities for customs' duty on imported second-hand cars.
The ministry issued a decree that gives second-hand cars, which run with electric engines or are powered by electric and fossil engines, a 10 percent deduction on the free of board (FOB) value applied to imported cars.
The decree will be applied to second-hand cars that are imported as of October of the model year through September of the following year.
The decree also gives second-hand cars of the abovementioned types, which are imported after September of the model year, a 10 precent deduction on the FOB value for each year for a two-year period as of October, in addition to a 5 percent deduction on the FOB value in the years to follow.
The decree capped cummulative deductions at 50 percent of the FOB value.
Minister of Finance Mohamed Maait expounded that the decree comes in line with the state's efforts to expand the use of electric vehicles, given that Egypt is a promising country for manufacturing transport vehicles.
The FOB value is a price that the buyer has to pay for imported shipments, excluding loading, unloading, customs, import duty, freight, insurance, VAT, and transportation from the port to the final destination.
Buyers traditionally prefer the FOB system for its relatively low cost compared to other taxation systems and the control it also grants them on shipping and transit time.
Second-hand car sales in Egypt are expected to see a contraction during 2021 and beyond, given the ongoing COVID-19 crisis, according to the Egyptian Automotive Dealers Association
It also expected such cars to witness a significant drop in their prices following the state’s strategy to convert gasoline-run cars to natural gas powered ones, possibly leading to a stagnation in the used cars’ market during the coming period.