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Tax exemption only for ‘Brand New’ electric cars; dealers in quandary
View(s):The price of electric vehicles will not reduce by Rs 1 million as envisaged in the 2018 Budget, because the concession is applicable only to ‘Brand New’ cars, which only authorised agents can import.
However, authorised agents do not typically bring in ‘Brand New’ electric vehicles, because they do not have the infrastructure or after-sales facilities. This means other importers who bring in ‘Used’ vehicles will not be exempt from the tax. This is because Customs regulations prevent the words ‘Brand New’ being mentioned in the relevant documents, unless the authorised agent is the importer.
“What they have done is to break the previous Customs verification into 2 segments — ‘Brand New’ and ‘Used’ — and given an import tax benefit of Rs 1 million for ‘Brand New’ cars,” said SPARK EV Managing Director Anuruddha Lihinikaduwa who created the brand at age 31.
“Individual importers cannot import ‘Brand New’ vehicles into the country, because the status of ‘Brand New’ will not be mentioned in Customs documents, unless the vehicle is brought in by the authorised agent,” he said.
At present, AMW is the appointed dealer. And the principal of Nissan Leaf, the most popular electric car in Sri Lanka, is not willing to hand out more dealerships. The current tax on a Nissan Leaf is Rs 1.7 million. The Budget also envisaged the tax concession for electric cars of 50kw or less. A Nissan Leaf is 80kw. “Implementing it for cars of 50kw or less does not serve a purpose, as it will open the gates to low-quality Chinese models,” he said.
Mr Lihinikaduwa’s Company imported and distributed all brands of electric vehicles. The business had grown sufficiently for him to invest in an after-sales facility and in fast-charging units from the Netherlands. Unlike other importers, the company dealt solely in electric vehicles.
But the revision of taxes on electric vehicles four times within two years, he said, destabilised an emerging market and flung him, the main importer of electric cars, into deep debt. And the concessions for electric vehicles in the latest Budget, Mr Lihinikaduwa said, were poorly thought out.
Finance Minister Mangala Samaraweera announced this week that the import taxes on an electric car will be reduced by at least Rs 1 million. Fifty electric public buses will be introduced, while the private bus sector will also be ‘incentivised’ to go electric. Other concessions will be targeted at increasing the number of electric three-wheelers on the road.
“Electric three-wheelers can run just 20km-30km on a single charge,” Mr Lihinikaduwa said. “What is the practicality of it?” he asked. “The lifetime of a battery is about six months.” “As for buses, who will assess the quality and the technical suitability of the vehicles,” he continued. Electric buses are available from Rs 2million to Rs 50 million.