CMTA offers assistance to govt. for proper implementation of luxury tax

The Ceylon Motor Traders Association (CMTA), which represents all major international vehicle manufacturers in Sri Lanka, yesterday offered its assistance to the government to properly impose the luxury tax proposed in the budget presented on Tuesday.

Budget 2019 proposed to impose a luxury tax on the cost, insurance and freight value or the manufacturer’s price of the vehicle, as it may be in excess of the luxury-tax free threshold. For instance, a petrol vehicle, which has a luxury value threshold of Rs.3.5 million, will be slapped with a 100 percent luxury tax, while an electric car,

with a tax-free threshold of Rs.6.0 million, will come under a 60 percent luxury tax.

The CMTA said it feared that if the luxury tax is levied based on the invoice prices, the duty revenue would be lost due to the under declaration of the invoice values by the non-manufacturer authorized used car importers.

“Thus, the association has made representation to the government that they will assist the government to fix values for every make and model of vehicle imported for the purpose of administering the luxury tax, so any importer of such a vehicle will pay the same luxury tax and so the tax levy cannot be manipulated,” a CMTA statement said.

The CMTA also requested the government to permit the vehicles ordered and with the already established LCS to be imported on the basis of the duty structure prior to Budget 2019.

Meanwhile, the association urged the government to legislate the definition of a ‘brand-new vehicle’ as one that is exported by the vehicle manufacturer, directly to an importer that is under the agreement to the manufacturer.

“This definition allows the differentiation of vehicles imported through the manufacturer that are covered by the manufacturer’s warranty from other imports through non-legitimate channels,” the CMTA said.

The association also requested the government register all vehicle importers and ensure they pay their due taxes and compliant with the laws of the land, to guarantee a level playing field.

The government raised taxes sharply on motorcars through Budget 2019 on Tuesday to deter excessive vehicle imports into the country. However, the removal of the 200 percent cash margin is likely to be an encouraging signal for vehicle importers.