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Sri Lanka Customs vehicle valuation perturbs motor traders, confuses buyers
View(s):Sri Lanka Customs has initiated a messy valuation system which has perturbed motor traders and confused prospective buyers on the eve of the 2016 budget, motor traders and customers complained. According to a gazette notification issued by the Finance Ministry recently, customs authorities have been empowered to make the valuation of the imported vehicle without considering the declared imported value and it creates serious problems, they said.
Finance Minister Ravi Karunanayake told a recent media conference that the Treasury was prompted to take this action as vehicle importers deprived the Government of Rs. 64 billion in revenue by way of duty and taxes, during the past nine months.Customs officials obtain the value of vehicles from web sites of manufacturers and calculate cost, insurance and freight CIF value, Mahinda Sarathchandra, President of the Vehicle Importers’ Association of Sri Lanka told the Business Times.
Based on this gazette, Customs immediately stopped accepting the dealers transacted values and instead, they published a set of values that are now applicable for the payment of customs duty, he revealed. The actual Transacted FOB value of the vehicle fixed in the gazette notification issued on February 2015 has now been excluded from the new valuation. Customs will use a predetermined value in order to apply relevant customs duties, back dated to 17 September 2015.
The Minister has postponed the effective date to 30 September 2015 during a discussion with his association last Friday, he disclosed. Mr. Sarathchandra revealed that the Minister told them at the meeting that the government is paying attention to grant some concessions from the 2016 budget for vehicle dealers encouraging them to export used vehicles, between 10 to 20 years old, to African countries.
He said that the Minister has told a meeting with Japanese motor traders in Tokyo recently that he will announce a plan to promote re-conditioned and new Japanese cars in the 2016 budget. He noted that he contacted one of the motor traders who attended the meeting who conveyed the details of the Tokyo meeting to him.
According to this Tokyo-based motor trader, the Minister had told them to restrict their vehicle exports during the period of budget but he has not directed them to completely halt exports.
This new valuation system is arbitrary and it is against international practices of customs valuation, he said adding that the value of certain motor vehicles and prices of some vehicles may increase by almost 50 per cent. Many prospective vehicle buyers are in jeopardy due to sudden valuation system introduced by the customs.
“The Customs action is putting buyers in trouble as vehicles they ordered from motor traders are now costing a significantly higher sum of money,” several customers told the Business Times.
Further the leasing companies are refusing to give 90 per cent vehicle leasing facility as the gazette notification indicating the change from 70 per cent to 90 per cent has not been issued as yet, they pointed out.
“No leeway was given for vehicles already ordered, and customs have already adopted this gazette with immediate effect and the motor traders are passing the additional coast to customers,” they said.
Through the Gazette notification No. 1933/16 relating to imposing Customs duties, the government has announced new Customs duties on Japanese motor vehicles like Toyota and others imported to Sri Lanka.
“Sri Lanka should follow the World Trade Organisation (WTO) agreement on customs valuation for a fair, uniform and neutral system for the valuation of goods for customs purposes — a system that conforms to commercial realities,” said immediate past chairman of Ceylon Motor Traders Association (CMTA) Tilak Gunasekara, Managing Director of Sathosa Motors Plc.
Customs should take the local agents valuation of the vehicle or the manufacturers value which ever his higher in calculating duty, he said adding that under the new calculation the duty on a full option Japanese car and a the same model with less options will be the same.
As per the new gazette the same value will be applied for older vehicles and newer vehicles of the same model, he pointed out.
According to new valuation, mainly Japanese and other cars will be affected but not Indian cars like Maruti, he added.