Changes to motor importation tax cause significant vehicle price changes

Changes to motor importation tax cause significant vehicle price changes

Written by News 1st

27 Oct, 2014 | 9:33 pm

The Sri Lanka Vehicle Importers’ Association says that tax amendments proposed through the 2015 Budget would cause the cost of vans to reduce by about one million rupees.

The 2015 budget proposes a single product tax to replace five types of taxes that were effective thus far in the importation of motor vehicles. Vehicle importers say the tax on vans which was about 152 percent, has reduced to 98 percent.

President of the Lanka Vehicle Importers’ Association Indika Sampath Merinchige stated the following:

“The cost of a vehicle like a Hiace, which is how consumers identify it, will reduce by between a million and 1.2 million rupees. A flat roof van will cost about 5 to 5.5 million rupees. The new tax will bring down the cost of a high roof van to between 6.5 and 7 million.”

Merinchige added that the prices of other types of vans would reduce by between 500,000 and 1 million rupees. Importers also say that the prices of small engine cars will also reduce through the proposed tax regime.

Merinchige said: “We cannot see a difference in the price of Hybrid vehicles. But the low value 1000 CC small cars that are imported from India and China, will be about 200,000 to 300,000 rupees cheaper.”

Vehicle importers also note that a significant price drop will not be seen in the case of some types of vehicle.

President of the Lanka Motor Vehicle Traders’ Association, Gihan Pilapitiya said:

“We have a problem at present. We pay VAT according to the importation price. A clear policy on this VAT payment has not been presented to us as yet. If this VAT will not become a cost that we have to bear, then the prices of vehicles will reduce in the future, but if we are faced with a situation where we are unable to claim the VAT payment, then I think the prices of vehicles will increase by a certain amount.”

Meanwhile, the Sri Lanka Customs and Vehicle Importers note that although it was proposed through the budget to introduce a concession for Sri Lankan nationals abroad to import vehicles, there has been no procedure published to implement this proposal.

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