Importing vehicles is a taxing issue
You've just moved to Hong Kong and are wondering whether to import your trusty little Corolla from your home country or buy a new one here?
If you opt for the former, the Hong Kong Automobile Association (HKAA) provides a one-stop service that includes collecting the vehicle from the docks, preparing a report of its condition, storing it and arranging inspection, registration and licensing. Some of the larger moving companies also offer a similar service, so shop around.
The HKAA's fee is HK$8,000, but shipping charges are excluded.
If you ship your car from Britain to Hong Kong, it would take about three months for it to get here and a minimum of three weeks to finalise the car's registration.
People import their cars to Hong Kong for sentimental reasons as the cost is similar to buying a new car in the city, according to Kenny Chan, assistant manager of the auto transport section of the HKAA.
New cars don't come cheap due to the hefty addition of the First Registration Tax (FRT) on all new vehicles.
The FRT uses a sliding scale of taxation, so the more expensive the car is, the more tax is charged. For example, a BMW 525i lists at ?30,700 in Britain, but here it sells for HK$559,000. Taking an exchange rate of HK$12 to the pound, the Beemer's price should be HK$368,400. But it costs a whopping 52 per cent more in Hong Kong.
The FRT reaches a maximum of 100 per cent, so it makes no sense to buy a new car overseas and have it shipped unless the model is not available here.
So what about importing a second-hand car? Once again, the FRT comes into play. The value of the vehicle is either taken as the actual purchase price or reviewed by the Commissioner for Transport if the price is deemed too low. The FRT for the first HK$150,000 is 35 per cent of the assessed value, for the second HK$150,000 it is 65 per cent and for the next HK$200,000 an 85 per cent tax is applied. Anything more than HK$500,000 is taxed at 100 per cent. Hong Kong has a thriving second-hand vehicle market, but it may be hard to find older or classic cars at realistic prices, so savings could be made by importing.
The Environmental Protection Department (EPD) requires that the vehicle has a certificate of conformity from the manufacturer, and passes both noise and emissions tests in recognised laboratories. The vehicle must also be able to run on unleaded fuel, a consideration that will mean expensive alterations for older engines using leaded petrol. Exemptions from the emissions and noise requirements may be granted for classic vehicles more than 20 years old, but the engine must be original and run on unleaded fuel.
To ascertain the FRT for second-hand vehicles, the purchase invoice, ocean bill of lading, delivery note, original vehicle registration documents and a valid insurance certificate must be presented to the Customs and Excise Department. Normally, the purchase price is the basis for the FRT. However, if the vehicle was previously registered in your name in a foreign country, the FRT assessment will be based on depreciation of 25 per cent of the purchase price per annum from the date of first registration of the vehicle to the date of import.
After obtaining an approval letter from the EPD, stating the vehicle has passed noise and emissions tests, it needs to be taken to a government-approved examination centre for a roadworthiness test.
The final step is to register the vehicle with the Transport Department.