Motor traders relieved by introducing transacted value for vehicle tax
View(s):Sri Lankan motor traders – battered by inconsistent state policy, increasing import duty, high interest rates and other levies on vehicles – heaved a sigh of relief after the government decided to consider the ‘true transacted value ‘when imposing tax on vehicles. This decision has been taken on a recommendation made by the high powered evaluation committee appointed by Prime Minister Ranil Wickremesinghe recently to assess a value of an imported vehicle following representations made by motor traders associations, official sources said. The ‘true transacted value’ is the actual Free On Board (FOB) value of the imported vehicle which includes local charges of every description incurred until the vehicle reaches the port in Sri Lanka.
Welcoming the government’s move, Chairman of Ceylon Motor Traders Association Gihan Pilapitiya noted that the transacted value system should be enforced in a more transparent manner ensuring the prevention of under-invoicing and other malpractices. In an extraordinary gazette notification issued in September last year the Treasury changed the basis on which Customs calculates the value of certain motor vehicles. Thus prices of some vehicles were increased by almost 50 per cent. With the new order the actual transacted FOB value of the vehicle has been excluded from the new valuation criteria and Customs is using a predetermined value in order to apply relevant customs duties. In terms of Article 10 of the Customs (Amendment) Act No. 2 of 2003, the minister has the power to set minimum values on goods in order to charge custom duties on such minimum values.
Using this power, the Finance Ministry had taken over the vehicle valuation functions for tax purposes from the Customs recently. Finance Minister Ravi Karunanayake had issued a directive to the ministry to determine the minimum value of vehicles being imported to the country for the purpose of levying taxes. A newly recruited team of officials was assigned these duties replacing experienced Customs officers which then caused delays in the clearance of vehicles from the port. But this system has now been changed and the revenue collection streamlined, a senior Customs official told the Business Times. The ministry was compelled to take over the functions of vehicle valuation for tax purposes following the action of certain officials to derail the government’s revenue collection measures, he added.