CYPRUS: Luxury cars to cost less, cleaner models subjected to lower road tax

Car showrooms are expecting sales of luxury vehicles to receive a significant boost after Cyprus MPs voted to abolish consumer tax on cars.

Based on estimates given by an MP to the Financial Mirror, new cars are to see their prices in the market drop from a range of EUR 200 to even EUR 40,000 in the case of some top-class luxury cars.

After the passing of the new tax framework, as of Friday, with the publication of the law in the Official Gazette, the consumer tax on cars will be abolished, substantially reducing the price for all cars depending on their age and value.

Parliament also voted in changes to the road tax scheme based according to the amount of pollutants released into the atmosphere from a vehicle. The changes are applicable after a two-month period once published in the Official Gazette, it will not affect the 900,000 cars already in circulation nor cars that have already been ordered.

Cars bought after the application of the new law may in some cases pay close to zero road tax, if their car falls into a clean car category according to EU directives.

The new system will be based on the pay as you pollute philosophy, with owners of cars with high emissions paying more to put their vehicles on the road.

The new regime applies to new and second-hand cars imported from overseas.

Under the current road tax system, only carbon dioxide pollutants are taken into account, but with the new scheme, all pollutants emitted or generated from car exhausts, such as nitrogen oxides (NOx), microparticles (MP) and organic volatile substances (VOC) are taken into consideration.

The formula for the calculation of a car’s road tax will be take into account the pollutant levels plus the age of the vehicle and the size of the engine.

Source: The Financial Mirror