Finance Minister announces changes to some Budget proposals

Minister of Finance and Mass Media Mangala Samaraweera yesterday announced revisions to some of the proposals he announced in his  Budget for 2018 relating to taxes on electric cars as well as financing for the purchase of vehicles under lease basis.

 Winding up the debate on the second reading of the Appropriation Bill in Parliament.,  the Minister also announced changes to the procedure for collecting VAT on the sale of Condominium housing unit  and the removal of restrictions on the foreign ownership on the shipping and the freight forwarding agencies.

Accordingly, individuals who have already opened Letters of Credit in their names to import vehicles prior to November 09 will be allowed to clear those vehicles at the rate of the duty that prevailed before the budget. However, these vehicles should be cleared before April 30^th 2018.

Further, the tax concession announced in the budget-2018 for the imported brand new electric car will be extended to cover the used electric cars, which are not more than one year old. According to a Gazette notification issued by the Minister of Finance and Mass Media Mr Mangala Samaraweera, the duty of the used electric cars that are not more than one year old  will be reduced by around Rs One million. Consequently, the duty rate applicable to electric vehicles (Less Than One year old ) will be Rs 12,500.00 per KW power of the motor of the electric car which is less than 100 KW power.

In the budget-2018 the finance minister had introduced an appropriate incentive structure to promote importation of vehicles powered by non-fossil fuel. He had introduced a new formula for import taxes on vehicles to be levied based on the engine capacity instead of the ad-valorem rate (CIF Value of the vehicle) rationalizing the tax base on vehicle. In addition, the Loan to Value (LTV) ratio for motor cars which is 50:50 at present will be further relaxed for Hybrid vehicles.

The Loan to Value Ratio will be revised and the Finance facilities could be provided by banks up to :-

            50% of the value                     -          for  Petrol and Diesel Motor Cars        

 70% of the value                    -          for Hybrid Cars                                  

            90% of the value                     -          for Electric Cars        

VAT liability on sale of Condominium Housing Units

The sale of Condominium housing unit will be liable for VAT from 01.04.2018. However, sale under a sales agreement entered in to, before 01.04.2018 will not be liable for VAT.

 Duty on locally assembled vehicle will remain as 30% and not 40 percent as announced in the budget on November 09

(CK)