Duty-free offer on EVs

SRI LANKA offered its overseas workers the right to buy electric vehicles duty-free last Tuesday (2) to encourage them to send money home and boost the cashstrapped nation’s depleted foreign exchange reserves.

The island nation banned vehicle imports in March 2020 as the coronavirus pandemic began to hit its finances, culminating in the president’s flight and resignation last month.

But in an effort to woo the more than two million Sri Lankans employed abroad, they will be exempted from the ban and allowed to bring in electric cars and motorcycles duty-free.

Before the ban, the duties would have ranged from roughly $5,000 (£4,130) to nearly $50,000 (£41,303), depending on the model.

“We are offering this never-before tax concession to encourage our expatriate community to send foreign exchange home through the legal banking system,” foreign employment minister Manusha Nanayakkara told reporters following last Monday’s (1) cabinet decision.

Overseas workers will only be able to use half their remitted funds for the purchase, which can have a maximum value of $65,000, he added, while those who have sent home smaller amounts can buy home appliances duty-free at the airport.

But overseas workers will have to remit their earnings through official channels to be able to benefit from the offer – and that will see them converted to Sri Lankan rupees at official rates.

Expatriates are known to use informal means to send money home because of better exchange rates as the country’s central bank is accused of keeping the rupee artificially overvalued. Overseas remittances have fallen by more than 50 per cent.