Sri Lankan motor traders have urged the Treasury to direct the Department of Customs to ensure valuation of imported vehicles in a transparent manner when calculating duty and taxes on vehicle imports. According to Finance Ministry guidelines issued recently, the customs authorities have been empowered to make the valuation of the imported vehicle without considering [...]

The Sundaytimes Sri Lanka

Sri Lankan motor traders worry over Customs valuation of imported vehicles

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Sri Lankan motor traders have urged the Treasury to direct the Department of Customs to ensure valuation of imported vehicles in a transparent manner when calculating duty and taxes on vehicle imports.

According to Finance Ministry guidelines issued recently, the customs authorities have been empowered to make the valuation of the imported vehicle without considering the declared imported value creates serious problems, they said

Custom officials obtain the value of vehicles from web sites of manufacturers to calculate cost, insurance and freight CIF value, Tilak Gunasekera, President of the Ceylon Motor Traders’ Association, who is also the CEO and Executive Director of Sathosa Motors Plc told the Business Times. He said that these prices are different from the FOB value which is the price of traded goods paid before or after they have been loaded onto a ship excluding transport costs, insurance and any other costs incurred.

This new valuation system is arbitrary and it is against international practices of customs valuation, he added.

“Sri Lanka should follow the World Trade Organisation (WTO) agreement on customs valuation for a fair, uniform and neutral system for the valuation of goods for customs purposes — a system that conforms to commercial realities,” he opined.The declared imported value of a vehicle depends on the country of importation therefore it is essential to follow a system that conforms to commercial realities, he said.

Citing an example, he said that the price of a BMW in England is different from the same product price in Brazil or France.

All these factors should be taken into consideration when making valuation of vehicles in a transparent manner, he said adding that no one will dispute if the Customs is following the WTO agreement and its customs valuation gateway, Mr. Gunasekera said.

Meanwhile Ranjith Pandithage, Chairman and Managing Director Diesel & Motor Engineering PLC (DIMO) noted that re-conditioned vehicle imports by unscrupulous importers through under invoicing and de–registering of vehicles in countries of origin are still being continued despite the Treasury’s action to revise depreciation value of cars in accordance with 2014 budget proposal.

He said that importing of vehicles by resorting to under-invoicing is continuing and it is a huge revenue leakage for government coffers.

Mr. Pandithage revealed that four Mercedes Benz cars were imported to the country recently misleading the Customs by under- invoicing.

Duties, taxes and surcharges on imported automobiles add between 150 to 500 per cent to the cost. Import duty and taxes on a midsized family car, is around 300 per cent of the cost, insurance and freight (CIF value).

“What is important is to create a level playing field in the industry,” he added.

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