Certain type of vehicle imports enjoy preferential tariffs under GSTP
View(s):Sri Lanka offers preferential tariffs for the import of certain types of motor vehicles under the Globalised System of Trade Preferences (GSTP), Finance Ministry sources revealed.
These vehicles are being imported to the country from countries like Thailand, Republic of Korea, India, Indonesia, Malaysia and Singapore which are members of the GSTP qualified for preferential duties, a senior official of the ministry who wished to remain anonymous told the Business Times.
The country has imported vehicles from India to the value of US$629 million, China $126.6 million, Thailand $32.4 million and Malaysia $15.9 million last year.
Customs tariffs for motor vehicles are at a very low level of 15 and 30 per cent compared to high rates of excise duties, he said adding that the preferential customs duties may have a marginal effect on the market price of vehicles.
Motor traders are not reducing the price of vehicles imported from GSTP member countries although custom tariffs are minimal for such vehicles, he said noting that this tariff concession has not been made public.
On the other hand some of the selected spare parts could be imported free of customs tariffs from India and Pakistan under the free trade agreements between Sri Lanka and those countries, he disclosed.
Brakes and servo-break parts, gear boxes and parts, drive-axles with differential, suspension systems, clutches, steering wheels, etc are among the spare parts which can be imported free of duty under FTAs with India and Pakistan.
Preferential duties are applied to spare parts such as rims fitted with tires, radiators and silencers which can be imported under the South Asian Free Trade Agreement (SAFTA), he pointed out.
In another vehicle taxation issue, the Cabinet Committee on Economic Management (CCEM) has decided that VAT and NBT are not payable by vehicle importers if they have paid demurrage charges as a penalty.
CCEM was of the view that this should not be a policy decision. The Inland Revenue Department (IRD) and Sri Lanka Ports Authority should decide this duty waver on case by case basis.
The Port Authority should determine as to whether the demurrage charges are paid as a penalty or not and convey its conclusion to the IRD, it was noted.