Government to establish special fund of recycling tax

Ukraine's Cabinet of Ministers on Nov. 7, 2013 approved draft amendments to the Tax Code regarding payment of environmental tax for disposal of decommissioned vehicles.

All proceeds from levying recycling tax will now go to a special fund administered by Ministry of Ecology and Natural Resources, the Information-Analytical Bulletin of the Cabinet of Ministers of Ukraine informs.

Analysts estimate that the environmental tax for recycling of decommissioned vehicles the first year will ensure the direct additional proceeds to state budget of Ukraine in the amount of 2.2 billion UAH. Much of this money will go for establishment of recycling cluster in Ukrainian industry under European model. It means that Ukraine will have to recycle at least 85% of weight of the car, 80% of which will be recycled again. 

Preliminary calculations estimate the cost of one recycling plant capable of processing 25 vehicles per hour at 7 million USD.

Since Sept. 1, 2013, the Law of Ukraine "On amending tax code of Ukraine regarding the payment of environmental tax for recycling of decommissioned vehicles" has been in force.

The purpose of this tax is to form a source of funds needed to cover the costs associated with recycling of vehicles.

Government analysts say that, due to drastic increase in number of vehicles, Ukraine gradually has started to expand scrapyards.  

There are approximately 10 million vehicles in Ukraine and 80% of them are older than 13 years. This will require the systematic recycling of vehicles that outlived their usefulness. Experts say that in 2016 the recycling needs of automotive industry will be several times higher than today (about 100 thousand/year).

The Law "On recycling of vehicles" passed in 2013 is a natural and normal step aimed to resolve the recycling problem. Moreover, it is clear that, as in the case with plastic, processing fees shall fall exactly on importers or domestic manufacturers.