SL motor traders worry over additional taxes on vehicle safety options, other features

Sri Lanka Customs is now imposing additional taxes on options of the vehicle such as safety features including more air bags and security alarms etc, motor traders revealed.

The newly appointed valuation committee of the customs is levying high taxes on vehicles with additional features and options in an arbitrary manner, they complained.

A decision has been taken by the customs in collaboration with vehicle importers to levy taxes considering only the category of vehicle agreeing that when imposing taxes, there is no need to examine options of the vehicle for the purpose of valuation, they said.

Whether these options are available or not the taxes will apply considering only the category of the vehicle, they said, adding that this practice has been changed before the presentation of the 2014 budget by the valuation committee.

They expressed their concern on the arbitrary duty increase of the new customs valuation committee setting aside the vehicle valuation system introduced in collaboration with the Vehicle Importers Association of Lanka ( VIAL) for the benefit of hundreds of vehi-

Now, the valuation is based on the previous old system according to various ‘options’ in imported vehicles, he disclosed

cle importers and buyers in the country

The online valuation system was aimed at simplifying vehicle valuing, taxing and clearing process and to prevent undervaluation of imported vehicles and other malpractices, W. R. Amarasekera, Managing Director, Dominant Motoring Pvt Ltd told the Business Times.

A schedule indicating the value of 117 Japanese models has been prepared and buyers were to get an opportunity to know the customs duty rate for the vehicle before clearing it, and the customs get tax payments in a stable manner, he added.

This system has helped to keep a stable valuation in vehicle market as well. So anyone can be aware about the vehicle prices, taxes, duty and other fees separately of vehicles to be imported. This system is being used for 117 listed categories. This will reduce corruption which may have occurred in the past, he said.

But this system is now not in operation, he said, adding that the customs officers are now levying taxes on safety options and other additional features of vehicles in an ad hoc manner.

The valuation is now based on the previous old system according to various ‘ options’ in imported vehicles, he disclosed.

Under this set up taxes on vehicles have been increased before the presentation of 2014 budget, he alleged.

Referring to the vehicle assembly operation in Sri Lanka, he noted that this is also not feasible due to the high tax on Completely Knocked- Down ( CKD) vehicle parts.

Assembling most of the key models of vehicles in Sri Lanka paying high taxes would not be profitable as reasonable duty is a prerequisite to be pricecompetitive in the market, he disclosed.

The challenge with highend models is that they sell only in small volumes and often don’t justify the investment for setting up a CKD assembly operation.

However, the increase in customs duty on imports has widened the price gap with locally- assembled cars, which were spared of a duty hike and, as a result, fully-built up cars are getting priced out of contention, he said.