Oh na na na nie!  Oh na na na zie! Zim, zimma who got the keys to ma bimma! Who am I?  The girls dem suga!  Pull up! Pull up!  The government is reducing taxes on European cars… but what’s the catch?

So when I first heard this story I was like, nah, this sounds too good to be true. The Government is really going to get rid of a major tax on LUXURY vehicles?  But we checked it out, and it’s actually true.  Though there are a few catches, so watch this video to the end.

You can now import European vehicles to Jamaica duty-free.  And this has actually been in effect since January.

This is massive news because many European cars are luxury brands.  I’m talking BMW, Mercedes Benz, Audi, Land Rover, Lamborghini and Ferrari. 

Now you might be wondering why? Like of all cars to cut tax on, they choose LUXURY models?  The politicians just gave themselves a big raise, now they wanna save money on their Benz too?

So here’s what happened.  Jamaica is part of the CARIFORUM-European Union Economic Partnership Agreement. This is a deal between the EU and 14 Caribbean countries, including Jamaica.  The agreement is supposed to help foster trade and investments between the regions. 

Now you may hear me switch between the terms customs tax, import tax and duty, but don’t worry, they all mean the same thing.  This is the tax on goods imported from outside Jamaica. If you’ve ever bought anything overseas and had it shipped to Jamaica, then you know import duty is a major cost.

But as part of the CARIFORUM-EU agreement, some European products, including motor vehicles, are exempt from customs tax. 

In exchange, we also get to export some of our products duty-free to the EU.  This makes our products cheaper and more competitive in their market.  The EU has 27 member countries so being able to export products duty-free to those countries is a major win for developing economies like Jamaica.

Now, the deal, which was signed in 2008, allowed member states to remove the customs tax in phases over 15 to 25 years. Which is what the Government of Jamaica did. 

Since signing in 2008, the import duty on European cars has gradually gone down from 40 per cent to 30 to 20 then to 10 per cent in 2022.  And starting January this year, 2023, it’s now at zero!

But, here’s the catch!  You know there had to be a catch right?

To qualify for the duty tax exemption, the vehicle must have an engine size of at least 2000 cc. Think a BMW X4 or X5 or an Audi A3 or A4.

And the vehicle must come from an EU member state. The EU has 27 members including France, Germany, Italy, Spain and Portugal. And as you know, many luxury cars come from EU member states.  

The duty-free exemption would not apply if you bought a Honda from a seller in Spain. Because Honda is a Japanese brand. 

The vehicle has to come directly from an EU member state or the United Kingdom.  If it has to stop over in another country before getting here, it has to stay under customs control in that country.  So, the exemption wouldn’t apply if you bought an Audi from a seller in America.

And to be clear, the EU agreement only removes the import tax.  You still have to pay GCT and SCT (that’s special consumption tax) on the vehicle. 

So, I know you’re probably thinking – will luxury European vehicles now cost less than American and Japanese cars in Jamaica?

Well let’s compare BMW, a luxury brand from Germany, and Lexus, a luxury brand from Japan.  Lexus is owned by Toyota.

A new BMW X4 starts around US$54,000, or J$8.2 million. Then you’d have to factor in GCT which is 20%  That’s an extra US$10,800. Then SCT is 15%, which is an additional US$8,100. Altogether the car would run you about US$80,000 or about J$11 million, plus your shipment costs.

On the other hand, a Lexus I-S 300, which has a similar engine capacity as the X4 starts around US$41,000 or J$6.3 million. But now we have to add the 20% for import tax (US$8,200), plus the 20% for GCT (US$8,200) and 15% for SCT (US$6,150). Altogether the car would cost you about US$63,000 or J$9.7 million.  So the Lexus still works out cheaper than the Bimma.

And keep in mind that there are upgrades that you can make to either car that could affect the price, so this is just a rough example of what it would cost.