Georgia Sharply Increases Taxes on Imported Cars Over 6 Years Old: Nominal Environmental Protection, De Facto Disguised Ban?
Share
Recently, Georgia's auto import market has ushered in a major policy adjustment. Prime Minister Irakli Kobakhidze publicly announced that Georgia will abandon the previous tough policy of "banning the import of vehicles over 6 years old" and instead significantly increase the customs duties on such vehicles by sharply raising the excise tax (акциз). This shift from "ban to tax increase" ostensibly retains the possibility of import, but in fact raises the tax burden to a level sufficient to change the market transaction logic, which has been directly pointed out by insiders as a "disguised ban" and will have a profound impact on the local auto trade market.
The Georgian government has closely linked this policy adjustment to environmental protection goals, claiming that the move is intended to improve domestic air quality, and emphasizing that it has fully "considered the interests of the private sector and citizens" during the revision process. As a vital hub on the ancient Silk Road and the modern Eurasian Corridor, Georgia's auto import and export trade occupies an important position in its foreign trade. In 2025, auto imports reached 3.87 billion US dollars, accounting for 20.9% of the total imports, mainly from countries such as the United States, Japan, and Germany, and the re-export volume also increased to 2.8 billion US dollars, flowing to Central Asian regions. The introduction of this tax increase policy is also regarded as an attempt by the government to seek a balance between environmental protection, foreign exchange control, and market demand.
According to Kobakhidze's statement, the core content of the new regulation is to unify the excise tax standard for cars over 6 years old, setting it at 4.5 lari (about 1.66 US dollars) per cubic centimeter of engine displacement. This tax calculation method has completely changed the previous import logic - whether an old car can enter the Georgian market no longer depends on "access permission", but on "whether the cost is cost-effective". Since the tax amount is directly linked to the engine displacement, the larger the displacement, the heavier the tax burden, and the import cost of large-displacement old cars will increase exponentially.
A typical case given in the report intuitively shows the shocking magnitude of the tax increase: a 2017 hybrid car with a displacement of 2.0L previously had an import excise tax of about 1,800 lari (about 663 US dollars). After the implementation of the new regulation, the excise tax will soar to about 9,000 lari (about 3,315 US dollars), an increase of as high as 400%. In addition, the policy clearly states that the excise tax on right-hand drive vehicles will still be levied at three times the rate, which means that the price competitiveness of right-hand drive vehicles in the local market will be further weakened. Georgia has only allowed the import of left-hand drive vehicles before, and right-hand drive vehicles were already at a disadvantage in the market. This policy will undoubtedly make things worse.
Compared with the previous policy, the magnitude of this tax increase is "jump-like", which is the core reason for the market shock. It is reported that in the past, the excise tax on vehicles aged 6 to 9 years in Georgia generally started at 0.80 lari/cc, gradually increased with the increase of vehicle age, and the maximum was about 2.4 lari/cc; while the new regulation directly jumps the standard to 4.5 lari/cc, a one-time increase of 200% to 500%, which far exceeds market expectations and directly breaks the profit space of mid-to-low-priced old cars.
In essence, this policy adjustment is a "passive withdrawal" of the Georgian government from the previous tough plan. As early as February 12, Kobakhidze announced that he planned to ban the import of vehicles over 6 years old (except electric vehicles) starting from April 1. At that time, the official also used environmental protection as an excuse, claiming that the ban would not affect vehicle re-export and would not harm the interests of residents who already owned old cars. However, this initiative quickly aroused strong criticism from the business community and even opposition from major political parties in the country. In the end, the government had to compromise, changing the "comprehensive ban" to a "high tariff threshold", ostensibly retaining the possibility of import, but in fact achieving the purpose of restricting the import of old cars.
Economist Roman Gotsiridze was outspoken about this. He said that this approach of raising import costs through huge tariffs is equivalent to "implementing a ban through detours", which will eventually "make imported used cars meaningless". This comment accurately points out the essence of the policy - ostensibly for environmental protection, but in fact, it restricts the import of cars over 6 years old in a disguised form through cost control, balancing the dual needs of foreign exchange savings and market stability. This is consistent with Georgia's long-term orientation of streamlining the tax system and balancing taxation and the market.
For auto trade practitioners, this policy shift in Georgia deserves close attention. The Georgian market itself is highly sensitive to vehicle prices. The new regulation levies tax based on displacement and sharply increases the tax burden "in one step", which will directly squeeze the living space of mid-to-low-priced old cars, even hybrid models are not exempt from tax. In the next period of time, the vehicle sources for Georgia will probably focus on categories with relatively controllable tax burdens, such as shorter vehicle age, smaller displacement, and electric vehicles. For Chinese auto export enterprises, it is necessary to adjust their layout promptly, avoid the risks of high-tax categories, and seize the market opportunities of exempt categories such as electric vehicles, so as to gain an advantage in the policy changes.