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Huge tax on sale of duty-free permits
View(s):A ten per cent tax will have to be paid when vehicles bought on duty-free permits are transferred, the Government has decided.The move would mean persons transferring a vehicle bought from a duty free permit holder would have to pay about Rs. 500,000 in addition to other taxes.
According to a new circular issued by the Ministry of Finance, if the vehicle transfer is done within five years of its import using the duty free permit, the buyer will need to pay the tax which will be calculated on the CIF (Cost-Insurance-Freight) value of the vehicle.
The tax will have to be paid to the Commissioner of Motor Traffic at the time of handing over of the transfer papers. The tax has been imposed to stop the abuse of the duty concession granted to senior public servants, officials said.Since the Government last year relaxed the rule which prohibited the sale of permits or vehicles imported using a permit for up to three years from date of issue, vehicle permits were being sold freely and had become big business. However till now there was no tax on vehicle transfers.
An official of the Vehicle Importers Association of Sri Lanka said that they were among those who were hit when the free sale of permits was introduced.
“The reconditioned car market suffered a big loss due to the free availability of vehicle permits which were purchased by a few who imported luxury vehicles,” he said.
Recently Customs officials too had raised concerns about the trend and the tax loss incurred due to permit sales and had asked the Government to consider banning the advertising of vehicle permits. .