Question on duty-free car import permits (2023)

[Dilanka Jayaweera]

Hi guys, 

As the title suggests, I have a question on car permits which is a little more specific than some of the other forum posts I've seen on this topic: 

 

So I'm a big fan of rotary engines being the owner of a Series 2 RX8 and an FD3S RX-7 (Currently unreg) which I'm restoring by myself, I love these cars and know a fair bit about how to look after one now after quite a few years of owning them - I'm in love with the new RX-9 that still hasn't hit the market but is supposed to come out in 2023/24. 

So my mum is eligible for her final govt. officers permit (I believe the duty free allowance is something like 36,000 USD) next year, she has no need for a new car and asked if I wanted to buy something with it - and I'd like to get an RX9 for sure!

So my question is (mainly), can you buy something that exceeds the duty allowance of a permit but maybe pay taxes on the balance?

The RX9 is rumoured to be priced around 70K USD, I have no personal issue with paying duties on the balance 34K USD if this is allowed (I mean yes I understand these taxes are literally funding corruption, but I guess I'm lucky enough to at least have the choice of getting something on lower taxes so I'm not complaining at all) - Being a 1.3L (or similar) rotary also helps with the tax side of things as well of course.   

Appreciate any help, this one is a dream car for sure! 

Cheers, 

D

 

 

[Dilanka Jayaweera]

5 minutes ago, Dilanka Jayaweera said:

 

The username is not my real name FYI, I'm using a dummy email account I have for these kinds of forums 😊

[Gummybr]

9 hours ago, Dilanka Jayaweera said:

Hi guys, 

As the title suggests, I have a question on car permits which is a little more specific than some of the other forum posts I've seen on this topic: 

 

So I'm a big fan of rotary engines being the owner of a Series 2 RX8 and an FD3S RX-7 (Currently unreg) which I'm restoring by myself, I love these cars and know a fair bit about how to look after one now after quite a few years of owning them - I'm in love with the new RX-9 that still hasn't hit the market but is supposed to come out in 2023/24. 

So my mum is eligible for her final govt. officers permit (I believe the duty free allowance is something like 36,000 USD) next year, she has no need for a new car and asked if I wanted to buy something with it - and I'd like to get an RX9 for sure!

So my question is (mainly), can you buy something that exceeds the duty allowance of a permit but maybe pay taxes on the balance?

The RX9 is rumoured to be priced around 70K USD, I have no personal issue with paying duties on the balance 34K USD if this is allowed (I mean yes I understand these taxes are literally funding corruption, but I guess I'm lucky enough to at least have the choice of getting something on lower taxes so I'm not complaining at all) - Being a 1.3L (or similar) rotary also helps with the tax side of things as well of course.   

Appreciate any help, this one is a dream car for sure! 

Cheers, 

D

 

 

Sorry to make you feel bad on a Monday morning. 

Right now your mothers permit is useless, unless you buy something locally assembled. You know that imports are banned right? Of course you could wait and see if the govt decides to import cars again maybe next year.

 

But on the bright side you do not need to worry about the CIF as the permit gives you a Rs. 3.6m benefit on the duty, of course the luxury tax will be on top of that, and it would be quite a bit more than the excise duty you pay on the engine capacity.

[iRage]

Kudos on wanting to get a decent car. However, the thing is, official release dates, etc...has not been released yet. Expected release date is 2024...in Japan (and Japanese manufacturers), this means it will likely be revealed around Autumn 2024 and deliveries starting end of 2024, 2025 (for the most part). Since your mom's permit is issued next year this might not be a problem. The bigger problem is...this is still speculation. On top of that, there hasn't been a single performance or highly desirable car a Japanese manufacturer has released that hasn't had a long waiting list even at the time of reveal. The local dealerships reach out to customers as soon as they are notified of official release dates and they start taking pre-orders. Around 2020, for cars like the GR Yaris, pre-orders started in January and the car was delivered within 2-6 months of release. However, with the whole chip shortage, those waiting times have increased to nearly a year. Also, since you are not living in Japan you will have to buy it through a vehicle exporter. Those guys put huge markups on cars like this. e.g. GR Yaris was 5.1mil yen at release, the exporters sold them for nearly 7mil yen (it took about 1.5 years for prices to become normal. GR Corolla 5.9mil yen...cheapest the exporters sells it for is 7mil yen..).

So the thing is....you will be paying a lot more than the 70,000USD dealer price/MSRP.

Also, like Matroska mentioned you will have to pay luxury tax (irrespective of the engine capacity) for the entire value.

Hope it works out...

[Dilanka Jayaweera]

On 8/14/2023 at 7:29 AM, Gummybr said:

Sorry to make you feel bad on a Monday morning. 

Right now your mothers permit is useless, unless you buy something locally assembled. You know that imports are banned right? Of course you could wait and see if the govt decides to import cars again maybe next year.

 

But on the bright side you do not need to worry about the CIF as the permit gives you a Rs. 3.6m benefit on the duty, of course the luxury tax will be on top of that, and it would be quite a bit more than the excise duty you pay on the engine capacity.

Yeah I am aware about the situation re. imports mate - This is evolving legislation right, we will have to start importing vehicles at some point or the other, and I'm not so worried about the timeframe. We will probably keep the permit around (based on the rules) as long as possible until imports eventually open up of course.

Luxury tax yeah, that's going to be an issue but should be limited to 80% above import value of Rs. 4 Mil because the RX9 is rumoured to be a petrol hybrid - and I'll probably import it as a company vehicle for our family business in order to get a tax benefit on it. 

Have to see though, I mean the way the country is currently, I will wait it out and see what happens, if it doesn't work out that's life haha

[Dilanka Jayaweera]

On 8/14/2023 at 8:25 AM, iRage said:

Kudos on wanting to get a decent car. However, the thing is, official release dates, etc...has not been released yet. Expected release date is 2024...in Japan (and Japanese manufacturers), this means it will likely be revealed around Autumn 2024 and deliveries starting end of 2024, 2025 (for the most part). Since your mom's permit is issued next year this might not be a problem. The bigger problem is...this is still speculation. On top of that, there hasn't been a single performance or highly desirable car a Japanese manufacturer has released that hasn't had a long waiting list even at the time of reveal. The local dealerships reach out to customers as soon as they are notified of official release dates and they start taking pre-orders. Around 2020, for cars like the GR Yaris, pre-orders started in January and the car was delivered within 2-6 months of release. However, with the whole chip shortage, those waiting times have increased to nearly a year. Also, since you are not living in Japan you will have to buy it through a vehicle exporter. Those guys put huge markups on cars like this. e.g. GR Yaris was 5.1mil yen at release, the exporters sold them for nearly 7mil yen (it took about 1.5 years for prices to become normal. GR Corolla 5.9mil yen...cheapest the exporters sells it for is 7mil yen..).

So the thing is....you will be paying a lot more than the 70,000USD dealer price/MSRP.

Also, like Matroska mentioned you will have to pay luxury tax (irrespective of the engine capacity) for the entire value.

Hope it works out...

Yeah I agree with all your points mate - No idea when it will be released, so have to wait and with the chip shortage and looking at how the dealers demand crazy money even for the currently released brand new cars in the US or Japan, it will be expensive. Chip shortage though is said to ease out around end of this year, and going into 2025-2026 so there is that, even in the West/Japan, new car and used car prices these days are very unsustainable, and will come back to some form of normalcy over the next few years. 

So I believe with these permits, you can claim it and keep it for some time - If and when I do this, I'd do this in 2 ways depending on what option is most cost effective:

1. I could import the car new using the permit, through maybe either C#lonial M#tors or even Unit#d Mot#rs (Who we have a relationship with because my mum imported a Montero with them previously, and we also personally know the shareholders there). 

2. Sell the permit (Or might even be able to use the permit on a below 2 years used car, I'm not 100% sure of the law here, I have to check), go to Japan together with my wife (I've always wanted to go there anyways so I wouldn't consider it an additional cost to buy the car, to visit the Nismo factory, check out the car scene there, catch up with my friends there and hopefully and do some sight seeing) and attend some of the auctions to get a 2 year old used RX9 and ship it here (I don't particularly believe in buying cars brand new, I'd be perfectly happy with a used one with a clear accident and maintenance history). 

What you raised and what Matroska raised are all concerns I have for sure - But I'll defo give it a shot and see how it goes! 

[iRage]

1 hour ago, Dilanka Jayaweera said:

how the dealers demand crazy money

In Japan it is not the DEALERS (i.e. manufacture sales outlets) who demand crazy money. Dealers cannot sell a car above what the manufacturer has stated it to be (they can sell it for lower by cutting out their fees and commissions but never over). It is the 3rd party car sales (mainly car exporters) who are marking up the car. These car exporters go and place early orders with the dealer to get the first releases. Then they sell it at high markups to consumers who couldn't get their orders in to or do not want to wait for the dealer to deliver or export it to other markets (this is what happened with Premios and Allions for about 10 years as 90% of those sold by dealerships were for export markets, also happens with the new Land Cruiser, Alphard/Vellfire, GR cars, etc...) .

1 hour ago, Dilanka Jayaweera said:

even in the West/Japan, new car and used car prices these days are very unsustainable, and will come back to some form of normalcy over the next few years. 

The internal vehicle prices in Japan have not been unsustainable at all. It has been quite stable since mid 2021 or so. Even then what happened was that the used car prices went up slightly because of high internal demand. Then it actually went down around early 2022 as there wasn't enough demand for exports and people were happy to wait for delivery of their new car for anything from 2 months to a year. So no... prices in Japan are stable. I have bought two brand new cars and 2 used ones within the last 3 over here. They were purchased at normal prices. If you are being told or believe that prices in Japan are unsustainable that is because:

a. you are looking at prices being pushed down consumer throats by car exporters who are trying to manipulate prices of used cars for export <yes.. most of these exporters are Sri Lankan... it is more or less a mafia>.

b. you are looking at prices of cars like GR Corollas or even retro sports cars like RX7 FDs and Skyline GT-Rs. Again... prices are manipulated by car exporters. Along with a frenzy from markets like the US just paying stupid prices to JDM car dealers in the US.

So no... actual car prices in Japan is definitely not "not-sustainable".

You can't just walk into an auction and bid on a car. You need to go in as a guest of a registered dealer who has membership to the auction house (no you can't buy it either. You need to have a registered car dealership and then operate for X amount of time, etc..). Also, for

You also cannot walk into a Mazda dealership and purchase a car either. The dealership can release the car only after registering it and to do that you need to be a resident of Japan with a proper residence and parking spot.

 

Edited August 16, 2023 by iRage

[iRage]

2 hours ago, Dilanka Jayaweera said:

and I'll probably import it as a company vehicle for our family business in order to get a tax benefit on it.

I believe there are type restrictions for this. Atleast there used to be. Like it had to be a commercial vehicle or if it was something like a sedan, the company had to be of a certain type (tourisrm, BOI, etc..). But Lanka being Lanka who knows what things will be.

 

1 hour ago, Dilanka Jayaweera said:

2. Sell the permit (Or might even be able to use the permit on a below 2 years used car, I'm not 100% sure of the law here, I have to check), go to Japan together with my wife (I've always wanted to go there anyways so I wouldn't consider it an additional cost to buy the car, to visit the Nismo factory, check out the car scene there, catch up with my friends there and hopefully and do some sight seeing) and attend some of the auctions to get a 2 year old used RX9 and ship it here (I don't particularly believe in buying cars brand new, I'd be perfectly happy with a used one with a clear accident and maintenance history). 

Please do come to Japan but don't make it just about cars. Besides...you are going to be seeing pretty cool cars all the time all over the place.  Rent a car and then go sightseeing. The best way to enjoy car culture over here is to actually drive. 

[Gummybr]

14 hours ago, Dilanka Jayaweera said:

Yeah I am aware about the situation re. imports mate - This is evolving legislation right, we will have to start importing vehicles at some point or the other, and I'm not so worried about the timeframe. We will probably keep the permit around (based on the rules) as long as possible until imports eventually open up of course.

Luxury tax yeah, that's going to be an issue but should be limited to 80% above import value of Rs. 4 Mil because the RX9 is rumoured to be a petrol hybrid - and I'll probably import it as a company vehicle for our family business in order to get a tax benefit on it. 

 

I like your resolve and patience. Everyone in the Industry is hopeful, all depends on what the politicians want to do.

 

In case of a Petrol hybrid the luxury tax is calculated as follows. CIF value in Rupees minus 4,000,000/= multiplied by 80%. Regardless of it being a personal or company car it wont change.

[iRage]

2 hours ago, Gummybr said:

In case of a Petrol hybrid the luxury tax is calculated as follows. CIF value in Rupees minus 4,000,000/= multiplied by 80%. Regardless of it being a personal or company car it wont change.

Of course...we are all hoping that once the imports open up the taxation framework will be the same, yet I think we all have that feeling that it won't be (or at least be a rapidly changing mess).

Edited August 17, 2023 by iRage