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Vehicle imports: Extra tax on dealers if they do not register within 90 days
View(s):By Damith Wickramasekara
A senior Treasury official said the tax was aimed at preventing dealers from importing vehicles in bulk and stocking them in sales outlets, as this would create a major dollar issue for the country.
“Our USD situation is still not in a good enough position to import vehicles in such large numbers and keep them in vehicle outlets,” the official stressed.
The move to gradually relax import restrictions on vehicles is in line with undertakings Sri Lanka has given to the International Monetary Fund (IMF) to lift all import restrictions by the end of the year, the official revealed.
He said the government would remove the import restrictions in stages for different categories. As a first step, with the agreement of the Central Bank of Sri Lanka (CBSL), a Cabinet Paper is to be submitted to remove import restrictions on tourist coaches and other passenger transport vehicles from next month. After Cabinet approval, a gazette will be issued announcing the removal of the restrictions.
In November, again with the approval of the CBSL, another Cabinet paper would be submitted to remove import restrictions on industrial vehicles such as lorries, tipper trucks, and backhoes, he said.
The process would be repeated in January next year, with a Cabinet paper being submitted to remove import restrictions on personal usage vehicles such as cars, vans, and jeeps starting in February, the official said.
All imported vehicles must be registered within 90 days, and the government would not allow vehicles to be sold with “garage number plates,” the official emphasised. Accordingly, the 3 percent tax equivalent to the CIF value would be levied if the dealer failed to register the vehicle within 90 days of importation.
He added that the Treasury had also recommended the lifting of import restrictions for motorcycles, though there was no decision yet on when these restrictions would be lifted. However, he added that the government had no plans to lift import restrictions on three-wheelers. He said the government would only allow the import of electric three-wheelers owing to environmental concerns.
A final decision has also not been taken on the issuing of vehicle permits. There are still some 8,000 permits pending under the existing scheme, the official revealed. The government, though, intends to introduce a new formula for vehicle permits, and this is being studied and discussed, he revealed. “The existing permit system does not bring any revenue to the government,” the official pointed out.
The country’s delicate foreign exchange situation is uppermost in the minds of the government when making decisions on the lifting of the vehicle import restrictions, the official noted, pointing out that about USD 1 billion would go out of the country when importing vehicles. “We intend to recoup the same amount through taxes on these vehicles,” he added.
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