A draft modification to the rules for input value added tax (VAT) deduction for vehicles has been published, and is expected to be effective from March 2014.
The proposed amendments will introduce limitations of the right to claim input VAT, applicable to all expenses concerning maintenance of vehicles, in particular to the purchase of a vehicle, fuel, and other costs.
There are specific provisions for vehicles with permissible maximum weight not exceeding 3.5 tons and that are used for both business and private purposes. In the case of such vehicles, the taxpayer will be entitled to reclaim 50% of VAT paid in connection with incurred expenses.
For vehicles which are used for business and private purposes, the right to deduct 50% of input VAT paid on the purchase of fuels will be temporarily suspended until 30 June 2015.
