News
Vehicle import ban to be lifted from next month; close eye on foreign exchange outflow
View(s):By Damith Wickramasekara
While restrictions on the import of vehicles for private use are to be lifted from next month, the government will be keeping a close eye on its impact on foreign exchange outflow.
While the government’s target in lifting the vehicle import ban is to boost the economy and increase tax revenue, there is still a risk when allowing vehicle imports, as “we don’t know how exactly it will affect foreign exchange outflow and fluctuation of the rupee,” a senior Treasury official told the Sunday Times. Nevertheless, he added that it would only be after the lifting of the restrictions that they would be able to gauge how much the rupee would fluctuate against the US dollar.
A Cabinet paper proposing the lifting of the ban on vehicle imports for private use is to be submitted to the Cabinet by the end of this month. It will be gazetted thereafter and implemented from February 1.
The lifting of the vehicle import ban is a condition of the International Monetary Fund (IMF). Once the restrictions are lifted, it will be conveyed to the IMF, as the move will be factored into the IMF’s next review of its Extended Fund Facility for Sri Lanka.
“We have told the IMF if the foreign exchange outflow and rupee depreciation prove too much, we will be compelled to reintroduce certain restrictions,” the official added.
Vehicles up to five years old can be imported for some categories, while in others, there will be a maximum of three years. No final decision has been taken on the matter, according to the official.
Taxes of up to 300% would be imposed on the imported vehicles, and there would be no reduction in this tax, the official added. He said the government expected to obtain an annual income of up to USD 1 billion by allowing vehicle imports.
The official added that there were also some 22,000 vehicle permits that had been issued prior to the economic crisis. “We are considering allowing these imports under the second stage of the lifting of import restrictions. Having a stable exchange rate will make it easier for us to do this,” he added.
The best way to say that you found the home of your dreams is by finding it on Hitad.lk. We have listings for apartments for sale or rent in Sri Lanka, no matter what locale you're looking for! Whether you live in Colombo, Galle, Kandy, Matara, Jaffna and more - we've got them all!