On April 1, 2026, Russia's new new automobile scrapping tax regulations were officially implemented, completely breaking the old model of Central Asian automobile re-export. Many practitioners wondered: Can Central Asian automobile exports still be done? The answer is clear: it can be done, but the old path of relying on "gray tax avoidance" will no longer work, and we must switch to a new model that is compliant and pragmatic.

The core of this new scrapping tax regulation is to plug the tariff loopholes in the Eurasian Economic Union. Previously, many traders took advantage of the tax differences between Central Asian countries (such as Kyrgyzstan) and Russia to avoid taxes by understating car prices and re-exporting. A car with an actual value of US$60,000 may be pressed to US$8000 when declared in Central Asia, earning a huge price difference after being transferred to Russia. The new regulations require that all vehicles imported into Russia through Central Asia must make up for the difference in taxes and fees at the time of registration in Russia, and be included in the scrapping tax for payment. Taxes in arrears must be made up without exceptions.

This policy directly zeroed the cost advantage of Central Asia's re-export. Originally, transiting through Central Asia could save more than 20% of taxes and fees, but now we not only have to make up for the difference, but also bear more of the costs of transshipment and compliance review, even more expensive than directly exporting to Russia. At the same time, the scrapping tax itself has been continuously increased, with an increase of 70%-85% in 2024 and an increase of 10%-20% every year from 2025 to 2030, further reducing profit margins.

Affected by policies, the market structure of Central Asia's automobile exports has undergone significant changes. The once-bustling transit port such as Kyrgyzstan has seen the volume of transit dropped sharply. Many small and medium-sized traders who relied on gray tax avoidance have been forced to withdraw from the market, and the industry has ushered in a reshuffle. But this does not mean that business cannot be done at all. On the contrary, it gives compliance operators a more level playing field.

There are several feasible new paths for practitioners. The most preferred option is to abandon the re-shipment of Central Asia and ship it directly from China ports to Russia, customs clearance in one step and pay full taxes. The process is shorter and the risk is lower, which is suitable for long-term batch operations. Secondly, we can deeply explore the local market in Central Asia. The demand for automobiles in countries such as Kazakhstan and Uzbekistan is stable, and we do not need to face the pressure of Russia to pay taxes, making it more cost-effective. In addition, second-hand cars that are 3-5 years old and have low displacement still have a certain cost performance ratio due to the low scrapping tax base and are suitable for targeted layout.

It should be noted that compliance is the bottom line. After the implementation of the new regulations, the risks of underreporting, concealing, and bulk imports in the name of individuals are extremely high. Russian customs has achieved data interoperability, and violations will face penalties such as car arrest and fines. At the same time, imported vehicles need to apply for OTTS certification in Russia. Certification in Central Asia is no longer common and needs to be planned in advance.

All in all, the implementation of Russia's scrapping tax will end the "gray arbitrage" model of Central Asian automobile exports, rather than the entire market. As long as we abandon speculative psychology and follow the path of compliance and localization, we can find living space whether we export directly to Russia or deeply cultivate Central Asia. For practitioners, this is both a challenge and an opportunity to achieve long-term development.

Source: New energy at the forefront of the sea

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