Vehicle Luxury Tax revised re-introducing CIF value based taxation

[Skyonline]

The government has revised the luxury tax (LT) formula and is to introduce a LT based on the vehicle manufacturing cost in addition to custom duty if its manufacturing cost (Cost Insurance Freight/CIF value) exceeds Rs.3.5 million.

Under this new formula, the LT vehicle import duty will be levied on the basis of engine capacity and LT tax on CIF value, informed official sources said.

Revision of excise duty on motor vehicles and implementation of LT on luxury motor vehicles is expected to generate revenue of Rs.48 billion, a senior Treasury official said. The relevant circular on luxury tax amendment will be issued soon, he said.

Earlier the LT on vehicles was based on engine capacity and now it will be changed to CIF value, he said adding that the government has decided to amend the luxury tax on motor vehicles to be based on price instead of engine capacity, specifying the vehicle categories which are exempt.

As per the Finance Act 2018, the LT was applicable earlier on only three categories of vehicles, including petrol vehicles with cylinder capacity more than 1800 cc, diesel vehicles with cylinder capacity more than 2300 cc, and electric vehicles with more than 200kw power.

But now all vehicles with a CIF value of Rs. 3.5 million or over will be subjected to an additional LT, he said.

Vehicle Importers Association of Sri Lanka (VIASL) Chairman Ranjan Peiris said most of the vehicles used by motorists like Toyota Premier, Toyota Axio, Honda Vezel, Toyota CHR and Honda Grace come under the LT bracket.

In accordance with the new tax, Rs. 1.2 million would have to be paid as LT for a vehicle with a 1,000cc engine capacity in addition to the manufacturing cost, he added.

A member of the Ceylon Motor Traders Association said that it’s not fair to charge the same duty for a 2,000 cc Korean-made vehicle produced and purchased for US$20,000 and a European manufactured one with same engine capacity purchased at $35,000, under the earlier taxation system.

Heeding to representations made by motor traders, the Finance Ministry has decided to amend the LT imposition reverting to the previous method of taxation on the price of the model.

http://www.sundaytimes.lk/191027/business-times/vehicle-luxury-tax-revised-re-introducing-cif-value-based-taxation-375190.html

[priyanka]

2 hours ago, Skyonline said:

The government has revised the luxury tax (LT) formula and is to introduce a LT based on the vehicle manufacturing cost in addition to custom duty if its manufacturing cost (Cost Insurance Freight/CIF value) exceeds Rs.3.5 million.

Under this new formula, the LT vehicle import duty will be levied on the basis of engine capacity and LT tax on CIF value, informed official sources said.

Revision of excise duty on motor vehicles and implementation of LT on luxury motor vehicles is expected to generate revenue of Rs.48 billion, a senior Treasury official said. The relevant circular on luxury tax amendment will be issued soon, he said.

Earlier the LT on vehicles was based on engine capacity and now it will be changed to CIF value, he said adding that the government has decided to amend the luxury tax on motor vehicles to be based on price instead of engine capacity, specifying the vehicle categories which are exempt.

As per the Finance Act 2018, the LT was applicable earlier on only three categories of vehicles, including petrol vehicles with cylinder capacity more than 1800 cc, diesel vehicles with cylinder capacity more than 2300 cc, and electric vehicles with more than 200kw power.

But now all vehicles with a CIF value of Rs. 3.5 million or over will be subjected to an additional LT, he said.

Vehicle Importers Association of Sri Lanka (VIASL) Chairman Ranjan Peiris said most of the vehicles used by motorists like Toyota Premier, Toyota Axio, Honda Vezel, Toyota CHR and Honda Grace come under the LT bracket.

In accordance with the new tax, Rs. 1.2 million would have to be paid as LT for a vehicle with a 1,000cc engine capacity in addition to the manufacturing cost, he added.

A member of the Ceylon Motor Traders Association said that it’s not fair to charge the same duty for a 2,000 cc Korean-made vehicle produced and purchased for US$20,000 and a European manufactured one with same engine capacity purchased at $35,000, under the earlier taxation system.

Heeding to representations made by motor traders, the Finance Ministry has decided to amend the LT imposition reverting to the previous method of taxation on the price of the model.

http://www.sundaytimes.lk/191027/business-times/vehicle-luxury-tax-revised-re-introducing-cif-value-based-taxation-375190.html

So this this was created by car sellers.... because

 

1. Want to clear their stocks

 

2. Grab some more orders ..

 

Etc etc....

 

Clear enough 

 

 

[kush]

This will virtually reduce car imports, government will not get the revenue what they get now.

Vehicle sellers will get rid of their unsold stock for panic buyers who think that they will newer be able to afford a car.

When government realize the mistake they will revise the tax again to promote imports so the cycle begins again

History repeating it self

[AVANTE]

........

[iRage]

Uhh....hasn't the government been trying ot reduce car imports to stop the outflow of foreign currency ? 

..and is this Sri Lankan journalism at its best isn't it ? Manufacturing cost is not the same as CIF !!!! WTF ???

[Quiet]

The same information was circulated some time back expecting tax increase. Nothing happened. I do not think this will happen until the parliamentary elections are done. Just a gimmick by the vehicle importers to get rid of stocks

[GayanR]

so can we expect used 121 price to go up by 1.2m??

 

[Skyonline]

Sri Lanka will charge a so-called luxury tax from high value cars and SUVs for which import letter of credit was opened after March 05, 2019 and the basis of engine capacity to charge taxes has been removed, the finance minister said.

The luxury tax will be applicable to petrol and diesel cars and jeeps valued (CIF) over 3.5 million rupees, hybrids over 4.0 million rupees and electric vehicles over 6.0 million rupees.

The tax will no longer be charged on the engine size for vehicles below the capacity of 1,800cc, for petrol, 2,300cc for diesel and a 200 kiloWatt motor will not apply from November 01.

But letters of credit opened up to October 31 and imports cleared before April 21, 2020 will still not be charged the luxury tax.

The finance ministry said cars like Toyota Vitz, Suzuki Every, Toyota Roomy, Suzuki Alto, Suzuki Baleno, Daihatsu Petrol, Honda Grace, Suzuki Wagon R, Toyota Aqua will not be subject to the luxury tax.

Sedans like Toyoa Axio, Premio and Allion will also not attract the luxury tax, the finance ministry said. 

https://economynext.com/sri-lanka-luxury-tax-for-high-value-cars-engine-capacity-base-removed-29920/

[peugeot407]

One positive outcome of this new tax scheme will be that we will not see any new threads asking " What to  buy ? Toyota Corolla or Audi A4" 

[tiv]

Pretty much anything good other than keis will have a cif above 35laks innit, 

[vag2]

is it true CC tax will be relaxed?

petrol: uptp 1800 cc

diesel upto 2300 cc

EV upto 100kW

[Skyonline]

17 hours ago, vag2 said:

is it true CC tax will be relaxed?

petrol: uptp 1800 cc

diesel upto 2300 cc

EV upto 100kW

The tax will no longer be charged on the engine size for vehicles below the capacity of 1,800cc, for petrol, 2,300cc for diesel and a 200 kiloWatt motor will not apply from November 01.

 

[kush]

2 hours ago, Skyonline said:

The tax will no longer be charged on the engine size for vehicles below the capacity of 1,800cc, for petrol, 2,300cc for diesel and a 200 kiloWatt motor will not apply from November 01.

 

Only luxury tax, import duty based on CC will remain

Do not expect vehicle prices to come down

[jmzsl]

Is anyone know Tax on double cabs? As for friend of mine who is a car importer said that tax for double cab is around 1.4mil. But he was reluctant to import one saying that car sale guys don't bid on the double cabs as it should be if tax is reduced.

[amsandun]

51 minutes ago, jmzsl said:

Is anyone know Tax on double cabs? As for friend of mine who is a car importer said that tax for double cab is around 1.4mil. But he was reluctant to import one saying that car sale guys don't bid on the double cabs as it should be if tax is reduced.

For a permit import, yes. For non permit, tax for double cab is 5 million.