Vehicle Importers’ Association of Lanka (VIAL) in a press release on its proposals for the 2018 budget states that it focuses on the development of vehicle industry while pointing out the difficulties the vehicle industry is facing and to create a better environment for the importers to operate their businesses smoothly.
It states that the Association wishes to provide an opportunity to the community to purchase a quality vehicle and also to increase the government revenue while reducing the outflow of foreign exchange.
Through these proposals we would like to encourage the government to form a system to increase the importation of environmental friendly vehicles to the country which will benefit the entire population of Sri Lanka.
Furthermore, the government implemented some of the proposals given by our association during last year’s budget and made them in to a reality, which in return benefitted the country. We believe that the government will accept our budget proposals this year as well and would implement them for the betterment of the motor vehicle industry and the economy of our country. It is a fact that the private sector has a higher contribution towards the country’s economy and the private sector bears more than 70% in service providing & financial management. Developed countries and most of the developing countries strive to protect the private sector as they pay large amounts of tax to the government & support the economy enormously by providing more job opportunities.
It is important that there should be a fixed market for vehicle importers and is essential that the foundation steps be taken from this year’s budget to implement a practical tax system for vehicles & to carry out the same for years without change, for both Franchise holders and used vehicle Importers.
The vehicle taxation system was simplified at the 2014 budget to a single tax and a system was implemented to charge taxes from the excise Tax while adding a 15% dividend to the vehicle value, hence the indirect taxes were forwarded to the government at once. Further, since the tax is paid at the source the government has benefitted massively since the income is generated at the beginning itself, and this system has eliminated any claimable taxes. The main problem with the current tax calculation is the method of deciding the value of a vehicle and especially the used vehicle importers have to face many irregularities in current valuation system compared to Franchise holders.
For the used car importers the tax is calculated depending on the Brand New value of a vehicle even though the particular vehicle is 4-5 years old. To overcome this issue we suggest applying a Unit Rate Duty for the Engine CC for vehicles from HS 8701 to 8711.
This system is in practice currently but the duty is taken for the Unit Rate or value-based tax, whichever is higher.
Therefore our request is to calculate duty based on the unit rate without calculating for value-based system as the franchise holders have the luxury of declaring their own low valuation and paying a lower tax.
The general public has been facing difficulties due to unethical activities of personal importers as well as permanent importers. We are not against personally importing a vehicle for private use but the problem arises once the personal importers started selling vehicles. We, permanent importers maintain our businesses with various overheads.
After proposing a similar suggestion to regularize imports, the government implemented a charge of Rs.10,000 for Motor lorries , Rs. 15,000 for motor cars &Rs.2,000 for motor Cycles. This we believe has not solved the issue of unethical practices as various individuals have been abusing this system.
Imports have not reduced even though this charge was implemented and this has become just a charge. Therefore we suggest the government to introduce a system to register importers annually with a reasonable registration fee without paying Rs. 15,000 individually for each vehicle.