Importation of fully electric vehicles for Lankan migrant workers stalled as CoPF raises questions
A Parliament Oversight Committee has put brakes on an Extraordinary Gazette notification seeking to extend the period of importing fully electric vehicles for Sri Lankan migrant workers, citing a lack of transparency and alleged discrepancies in the scheme.
When the Committee on Public Finance (CoPF) convened last week under the chairmanship of Dr. Harsha de Silva to consider the extension of the gazette notification that would allow the importation of electric vehicles until September 30, it was decided to postpone the process of approving the gazette until relevant state institutions involved in providing fully electric vehicle permits for Sri Lankan migrant workers submit reports to the Committee.
The decision was taken after the Ministry of Labour and Foreign Employment refused to provide information regarding those who have imported vehicles when requested by the Ministry of Finance, the Committee said, while instructing information be provided within two weeks. "Instructions have been given to provide all information, including the party denoted as the facilitator."
Stressing that there is no transparency in the concessionary scheme, Dr. de Silva instructed that a full analysis be carried out jointly by the Ministry of Finance, the Central Bank, Sri Lanka Customs, and the Ministry of Labour and Foreign Employment. "Until the analysis is received, it is not possible to give approval to the relevant gazette extending the period of licensing,"
Last February, the Ministry of Labour and Foreign Employment introduced a scheme to provide fully electric vehicle permits to Sri Lankans employed abroad under luxury car tax concessions of up to Rs 12 million to those who have remitted USD 20,000 or more to the country.
The scheme was introduced in September 2022 and was extended further through separate gazette notifications that were issued on May 31 last year and on January 24 this year.
The Chair also informed the Committee that although the Ministry of Finance had requested the Ministry of Labour and Foreign Employment to provide all relevant information, including the persons whose vehicles were brought from the beginning of this process, the Ministry of Labour and Foreign Employment has said that the Attorney General should be consulted about the provision of confidential and private information.
Vehicles with a tax relief amounting to Rs. 100 million have been imported and it was disclosed that 1019 permits have been issued based on USD 109.8 million remittances received through this, the Committee was told. The officials also said that the value of the permits granted so far amounts to USD 46 million.
"Even if these remittances are added to the account at once, irregularities may occur in the qualification of a foreign worker for this facility and through this system various smugglers will also be given space for money laundering," Dr de Silva stressed.
Expressing concerns whether the workers who do normal jobs have brought such high end valuable vehicles to the country, the Committee noted certain elements might be misusing the scheme since this is the only opportunity available for importing vehicles in a background where the import of vehicles is prohibited.
This is not the first time a Parliament Oversight Committee looked into the matter.
In September last year, the Parliament Oversight Committee of Ways and Means also looked into the scheme and raised concerns about accessibility and transparency as well.
According to Information obtained through a Right to Information (RTI) by the Sunday Times, the Excise duty exemption from the Social Security Contribution Levy (SSCL) tax, along with the threshold increase for Luxury tax, was implemented from September 9, 2023, exclusively for this scheme.
The total tax collected until September 30, 2023, amounted to Rs 809,526,206, according to data from the Department of Customs.
By October last year (2023), a total of 119 super luxury vehicles worth Rs 1.4 billion were imported into the country utilising the concessionary scheme.
Appearing before the Parliament Oversight Committee of Ways and Means, senior Customs officials revealed that an imported vehicle was sold at Rs 41 million but the cost was merely Rs 20 million.
Customs officials also raised questions about whether the LKR 21m profit margin was declared to the Inland Revenue Department (IRD) by the company, raising questions of any money laundering activities.
When Customs officials launched a comprehensive inquiry into the private company and its shady dealings under the concessionary scheme, the company refused to assist them.
A senior Customs official told the Sunday Times that there was political pressure to release the vehicles that were seized by the Customs officials in the warehouses after their raid last year.
“With regard to the Custom offence, there are areas- for example - we have documents. They sold it for LKR 41 million. But the cost is LR 20 million. The LKR 21 million profit margin whether it was declared to the Inland Revenue Department (IRD) or whether there is any corruption there. Also, any sort of money laundering? This is a vast area,” a senior Customs official who testified before the Parliament Oversight Committee said.
Meanwhile, the Vehicle Importers Association of Sri Lanka issued a public notice in March requesting people to come forward and lodge complaints with the body if the permits issued to migrant workers were misused by the importing companies.
The advertisement also said that the body received several complaints from Sri Lankans here and abroad on the “injustice” permit holders faced.
Prasad Manage, President of the body told the Sunday Times that those issues had been resolved and as of now most of the vehicle importing companies are allowed to import electric vehicles under the scheme.