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Ford loses tax breaks on Russian-made Focus

Reuters

ST. PETERSBURG, Russia -- Ford Motor Co.'s only factory in Russia has lost tax breaks worth around $700 per car it produces due to a row over sourcing parts locally, officials said on Monday.

The row also caused a brief halt to production in the factory that aims to produce around 68,000 Ford Focus cars this year.

"They did not reach the localization of 40 percent this year which was written into the agreement (on tax breaks) and that's why they came to a standstill," Leningrad Region Vice Governor Grigory Dvas told Reuters.

A Ford spokeswoman denied the company had failed to meet the 40 percent target for local parts and said Ford had been forced to halt production due to new demands from the tax authorities for clearing new cars for sale.

"In order not to increase the time that customers have to wait for cars the company has decided to take the financial risks on itself and pay customs duties on new cars with the intention of recovering them under current legislation," Ford Russia spokeswoman Yekaterina Kulinenko said.

The $700 tax break on new vehicles is due to a customs exemption that allows Ford to import car parts without paying duties. A basic Ford Focus costs around $11,700 in Russia.
 
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