News
Vehicle importers claim tax calculations irrational
Vehicle importers have urged the Government to reconsider the increase in the Unit Rate Tax on the basis that calculations were irrational, resulting in prices of some vehicles soaring by as much as 60 percent.
Two of the leading vehicle importers associations said the move to increase the tax would have a severe impact on the vehicle industry and those planning to buy vehicles. The Ceylon Motor Traders Association (CMTA) said the increase in the Unit Rate Tax would mean the payment of tax based on the cubic capacity of the engines, a system that was agreed upon by the trade as an interim measure and not as a permanent solution to sort out the issue of undervaluation of vehicles.
“We believe that the auto trade should not be made to pay for the inefficiencies and the mistrust amongst government officials by making our businesses nonviable,” the Association said. It said the new rates virtually prohibited vehicle imports in some segments and the import duty itself could increase ranging from Rs. 200,000 to Rs. 15-20 million a unit, depending on the vehicle type.
The Vehicle Importers Association of Lanka said a number of people who had opened Letters of Credit also would be affected by the sudden increase in the Unit Rate Duty. The Association’s President Sampath Merinchchige said the Government should provide a concession for people who had already opened LCs.
If undervaluation was a problem, the Customs should work out a mechanism to overcome it, he said. A senior Finance Ministry official said the decision to revise the duty on vehicles from Friday was a fresh attempt to prevent undervaluation of vehicles and save foreign exchange by reducing imports.
He said previous attempts to prevent undervaluation had not been successful and therefore the ministry had decided on this Unit Rate System. The official said that after Finance Minister Ravi Karunanayake returned from Japan, the Government might consider providing some relief to those who had already opened LCs.