Hybrid car importers urge the government to extend the one month tax relief period
Individual importers of hybrid vehicles are urging the government to extend the one month tax relief period granted for them as it takes at least three months to arrive from abroad to the landing port in Hambantota. Excise duty on vehicles is imposed on IF value on its arrival at the port.
The Treasury issued a circular on Wednesday February 11 granting tax relief to individuals importing hybrid vehicles with maximum engine capacity of 2500cc for their personnel use under a condition that they should have opened a letter of credit (LC) in their name on or before January 29 (the day the budget was presented).
This concession will also be given to individuals who have made the full or part payment to purchase a hybrid vehicle from a vehicle importing company.
According to the circular such vehicles should be cleared from the port on or before February 28. But many individuals who have opened LCs before January 29 say that their vehicles are scheduled to arrive at the Hambantota Port in a couple of months and therefore they will be compelled to pay the excise duty increased in the interim budget.
Ceylon Motor Traders Association (CMTA) President Gihan Pilapitiya told the Business Times that with the excise duty on hybrid vehicles being increased to 80 per cent from 50 per cent, the price of a Prius car would go up by Rs. 975,000, Axio by Rs. 725,000 and Honda Fit by Rs. 700,000.
He said that used hybrid cars have been flooding the market during the past six months at an average of 900 units per month. Unlike normal reconditioned cars, reconditioned hybrids could create problems as the battery usage is limited to about two years and new batteries are very expensive.
Mr. Pilapitiya pointed out that the new tax hike will restrict hybrid imports preventing the foreign exchange drain. The government’s move will also curtail used hybrid car imports, he added.
The interim budget proposed revised excise taxes applicable on hybrid vehicles in view of the unhealthy tax disparity between hybrid and normal cars, he explained.