Government decides against increasing duty on EV's

Source : http://bizenglish.adaderana.lk/government-decides-against-increasing-duty-on-electric-cars/


At a recent Cabinet meeting the President has decided to cancel the 2016 budgetary proposal to increase the duty on electric cars from the existing 5 per cent to 50 per cent.

Joint Cabinet spokesman and minister Gayantha Karunatilleke said that decision had been taken while considering the requests from various parties.

Ada Derana Biz also inquired from Sri Lanka Motor Vehicle Importer’s Association co-president Mr. Kokila Deekiriwewa on the increase of duties on electric motorcars from 5% to 50%. He responded by saying, “At the Cabinet meeting last week, the President had put forward a proposal to remove the 50 per cent duty imposed on electric motorcars through the 2016 budget. If this proposal is to be implemented, then it needs the approval of the Finance Minister.

“If such a tax revision is being done, under Sub-Section 3C in the provisions under the Manufacturing Special Tax Act, the Finance Minister has to inform the Customs Department. Only the Finance Minister has the authority to sign this. To my knowledge, the Finance Minister is overseas at present. Hence, we have learned that such a notice has still not been given.”

Vehicle imports to drop by about 90 percent after govt regulations

Sri Lanka's vehicle imports will drop by at least 90 percent after the government changes the way it calculates the value of certain motor vehicles, officials said on Friday.

The Indian Ocean island nation is trying to discourage unnecessary imports in a move to prevent dollar outflows and further weakening of the rupee currency.

Pressure on the currency has intensified after the central bank effectively floated it on Sept. 4. It has fallen 4.6 percent since then.

The finance ministry in a special gazette notification on Sept. 22 changed the basis by which customs will calculate the value of vehicles to one that is determined by the price provided by the manufacturer.

Previously, valuations were made based on the higher of two figures: the price determined by the director general of customs based on prices furnished by the manufacturersor the actual transaction value of the vehicle.

"Vehicle imports will drop by about 90 percent, that may be the intention of the people who created this," Kokila Deekiriwewa Co-President of the Vehicle Importers Association of Lanka told Reuters.

"Now, customs arbitrarily decides the valuation of vehicles on top of the rupee depreciation and other government regulations to discourage vehicle imports. So this will increase vehicle prices drastically."

On Oct 2, the finance minister also imposed a 100 percent margin on letters of credit (LC) for motor vehicles.

The cost of importing vehicles in the first seven months almost doubled to $744.4 million, central bank data showed.

The balance of payments during the first seven months of 2015 is estimated to have been in a deficit of $1.21 billion, compared with a surplus of $2.02 billion in the same period last year. (Reporting by Ranga Sirilal; Editing by Kim Coghill)

Source : http://in.mobile.reuters.com/article/idINL3N12923720151009

වාහන සඳහා බදු ඉහල දැමීමට හේතුව

ජපන් වාහන ශ්‍රී-ලංකාවට ගෙනඒම අවමකිරීම සඳහා කටයුතු සැලසීමට හේතුවූ කාරනාව වශයෙන් මුදල් අමාත්‍යවරයා ප්‍රකාශ කරන්නේ ඉදිරි දින 90 ක කාලය ඇතුළත දැනට වැඩිවි තිබෙන ඩොලරයේ අගය රුපියල් 130කට ආසන්න අගයක් දක්වා පහත වැටීමට නියමිතව ඇති බවයි.

ශ්‍රී-ලංකාවට ලැබීමට නියමිතව ඇති විදේශ ආධාර ප්‍රමාණයත් රුපියලේ අගය ස්වාභාවික ලෙස ස්ථාවරවීමට ඉඩහැරීමත් තුල මෙම තත්වය ඇතිවනු ඇති බව ඔහු ප්‍රකාශ කරයි. නමුත් මේ මොහොතේ වැඩිපුර වාහන ගෙන ඒම තුල ජනතාවට වැඩි මුදලක් ගෙවීමට සිදුවීම හේතුවෙන් වාහන ආනයනක කිරීම අධෛර්යය කිරීම සඳහා මෙසේ බදු පැනවීමට තිරණය කරනලද බව වාර්ථා වේ.

එමෙන්ම එළැඹෙන අයවැයත් සමඟ ආණයනික බදු අඩුකරනවාට අමතරව නව වැඩපිළිවෙළක් යටතේ ජපන් වාහන තොගයක් එකවර ගෙන්වන අයට අමතර වාහනයක් සඳහා විශේෂ සහනයක් ලබාදෙන වැඩපිළිවෙලක්ද සකසා තිඛෙන බව වාර්තා වන අතර මේ අනුව වාහන මිල තවත් පහල යනු ඇති බව අපේක්ෂිතයි.

Source : http://theceylon.net

Custom Valuation of Vehicle List

Motor Vehicle List with new FOB values

Bens http://www.customs.gov.lk/news/fob151002.pdf 

Landrover http://www.customs.gov.lk/news/fob2.pdf 

Mitsubishi http://www.customs.gov.lk/news/fob3.pdf 

Audi http://www.customs.gov.lk/news/fob4.pdf 

BMW http://www.customs.gov.lk/news/fob5.pdf 

Toyota http://www.customs.gov.lk/news/fob6.pdf

With this order the actual transacted FOB value of the vehicle has been excluded from the new valuation criteria and Sri Lanka Customs will use a predetermined value in order to apply relevant customs duties.

As per the above gazette notification, issued on September 22, customs value of certain motor vehicles imported should be the aggregate of the following four items.

(1) Customs value, determined by the Director General of Customs based on the price furnished by the manufacturer of such vehicle.
(2) Cost of transport to the port of Sri Lanka.
(3) Loading, unloading and handling charges associated with the transport to the port of Sri Lanka.
(4) Cost of insurance to the port of Sri Lanka.

When compared to the early gazette notification published on 10 February 2015, there is only one major difference which affected the first item above.

(1) Higher of the two alternative values of (i) and (ii) below;

(i) Price determined by the Director General of Customs based on the price furnished by the manufacturer of such vehicle:

(ii) Actual Transacted Free On Board (F.O.B.) value of the vehicle. Transacted value shall include local charges of every description incurred until the vehicle reaches the port in Sri Lanka.

It is clear that the actual transacted FOB value of the vehicle has now been excluded from the new criteria.

Sri Lanka Customs will use a predetermined value in order to apply relevant customs duties, back dated to 17 September 2015. The effective date was then verbally postponed to 30 September 2015.

For instance as per Sri Lanka Customs data, 1800 cc 4 Cylinder PRIUS has a FOB value of 3,497,237 Japanese yen and that figure will be used as the base for their valuation.

2400 cc 4 cylinder RAV 4 has a value of 2,591,714 Japanese yen, while 2700 cc 4 Cylinder PRADO has a value of 3,956,727 Japanese yen.

According to the provisions of the gazette, these numbers are based on the prices furnished by the manufacturers of these vehicles. But the exact way as to how these predetermined values are obtained is undisclosed.

Kokila Deekiriwewa, a lawyer by profession and Co-President of Lanka Vehicle Importers Association told LBO that these values are arbitrary.

“These are baseless figures with just high values. These should be ‘based’ on the prices of manufacturers not ‘beyond’ their prices,” he said.

“As an example, you’ll have to pay more than 800,000 rupees to clear an imported Aqua car because of this.”

As per the new gazette same value will be applied for older vehicles and newer vehicles of the same model.

“Whether it is manufactured in 2012 or 2015, same duty will be applied.” he said.

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.

“So, the DG of Customs or any other official has no power to set values; it should be done by the minister himself through a gazette and it’s not transferable,” he said.

“It is unfair to decide arbitrary values using several customs officials,” he further stressed.

Source : http://www.lankabusinessonline.com/sri-lanka-vehicle-prices-to-increase-with-new-customs-valuation-basis/

Japanese cars hit the sky

Through the Gazette notification No. 1933/16 pertaining to imposing Customs duties, the government has announced new Customs duties on Japanese motor vehicles like Toyota and others imported to Sri Lanka.

Accordingly, the Customs duty on a Toyota Aqua vehicle has been increased by Rs. 770,000while the duty on a Toyota Axio vehicle has been increased by Rs. 703,000.

Furthermore, the Customs duty on a Toyota Hiace Petrol vehicle has been increased by Rs. 1,365,000 and a Toyota Hiace Diesel vehicle by Rs. 1,700,000.

Similarly, the Customs duties on Toyota Premio/Allion vehicles have been increased by Rs. 675,000 and Toyota Prius motorcars by Rs. 1,120,000.

Also, the Customs duty on a Toyota Harrier has been upped by Rs. 1,150,000 while on a Mitsubishi Outlander the duty has gone up by Rs. 852,000.

The duty increases on these vehicles are given in the following Table:

Commenting on this, Sri Lanka Motor Vehicle Importers’ Association president Indika Sampath Merinchige said that the prices of these vehicles would increase in accordance with these Customs duty increases.

He also added that due to the duty increase on Japanese vehicles, the prices of Indian manufactured vehicles too would increase.

Source : http://bizenglish.adaderana.lk/exclusive-duty-increase-on-japanese-cars-hit-the-sky-aqua-up-by-7-lakhs-prius-by-11-20-lakhs/

100 percent margin deposit on car import LCs

Sri Lanka will impose a 100 percent margin deposit on car import LCs with effect from today, Finance Minister Ravi Karunanayake told at a media briefing held in Colombo.

According to data Sri Lanka’s expenses on vehicle imports has doubled to 744 million US dollars for year 2015 compared to 374 million dollars in the same period last year.

The margin will be effective from today October 02, 2015 Karunanayake said.

The same step was last taken in 2013.

Sri Lanka has imported about 491,000 vehicles for the eight months ended August this year.

“We have more vehicles in Sri Lanka than we require at the moment. Even though we understand the need to have a vehicle,” Karunanayake said.

“We are taking these measures to control it,”

The loan to value ratio (LTV) for vehicles, however, will be increased back from 70 percent to 90 percent due to the imposition of the 100 percent margin deposit on LCs.

“When we increase the LC margin, we can relax the loan value,” Karunanayake said.

“We received a lot of requests from banks and finance companies to relax the loan value as it was hitting the second hand car market"

Source: http://www.lankabusinessonline.com/sri-lanka-slaps-100-margin-on-car-lcs-calls-for-expat-funds-finance-minister/

Vehicle tax hike to curb imports

The Sri Lankan government is considering a tax hike on car imports to curb imports and stop the outflow of foreign reserves, official sources revealed.

The Sri Lankan rupee depreciation will not be sufficient to slow the demand for vehicles, and the government will be compelled to increase vehicle taxes, an official said adding that a sizable portion of the excess liquidity gained partly by foreign borrowings went into vehicle imports. Sri Lanka’s foreign exchange reserves have dropped to around US$ 6 billion from $9 billion, official data showed.

Under this set up the Treasury has had to suggest measures to control imports as the country’s fuel bill has also risen in the recent past due to lowering of prices, he added.

Source : http://www.sundaytimes.lk/news-online/sri-lanka-considers-vehicle-tax-hike-curb-imports.html

Off-peak tariffs to charge EV's

Sri Lanka’s state-owned electricity service providers are now offering domestic time of use (TOU) electricity tariff for cheaper charging of electric vehicles. “During the off-peak hours only Rs.13 is charged per unit, which is a fair amount for the electric vehicle charging purposes,” a Public Utilities Commission of Sri Lanka (PUCSL) statement said. The off-peak hours run from 10:30 p.m.-5:30 a.m. Tariffs during daytime hours of 5:30 a.m.-6:30 p.m. will be Rs.25 per unit and Rs.54 per unit will be charged during peak hours between 6:30 p.m.-10:30 p.m. 

The new tariff scheme is an alternative tariff system for domestic users who consume a three-phase, 30 A or above power supply. 

“Those who wish to upgrade their customer category from the existing domestic category to TOU tariff should apply it from the regional area engineer’s office of their service providers (Ceylon Electricity Board (CEB), Lanka Electricity Company Private Ltd (LECO)). Such customers should pay for the new meter which is required to support the TOU tariff,” PUCSL said. The PUCSL said that those opting for the new system would contribute in lowering peak time consumption and increasing off-peak consumption. 

This would help balance the loads in the coal power plants Sri Lanka increasingly depends on. Stopping and restarting coal-fired plants between peak and off-peak times is time consuming and causes energy wastage. -


Source: http://www.dailymirror.lk/88255/off-peak-tariffs-to-charge-electric-cars

There is a case to increase electric car duties to a more logical 50 percent...

Tariffs above 150 percent should be rationalized to a range between 100 to 150 percent as the market has shifted to hybrids. “Even the luxury cars are hybrids. There is a case to increase electric car duties to a more logical 50 percent,”

Source : http://www.lankabusinessonline.com/expert-view-bigger-problems-underlie-sri-lankas-vehicle-import-bill-says-murtaza/

A rash of credit-fueled vehicle imports is affecting Sri Lanka’s balance of payments at the moment.

But the bigger problem is not addressing fundamental monetary and fiscal policy issues, says Murtaza Jafferjee, the chief executive at Colombo-based JB Securities.

“The primary factor fueling the demand for vehicles is credit. When the larger banks started offering leases at interest rates ranging from nine to ten percent, demand skyrocketed,” he said.

Brand new car registrations rose to 4,990 units in August, up 533 percent from the same month last year. Total vehicle registrations were 50,555 in August, although off an all-time high of 62,221 in July.

Sri Lanka’s central bank spent 800 million dollars during July and August propping up the rupee, before allowing a four percent depreciation last week. Analysts now have to extricate the reasons that led to this unhealthy situation.

“When you take the historical experience of car prices holding their value over time in nominal terms I believe most people view their car as a real asset as they view gold jewellery,” he said.

“It will hold its value and also offers the added advantage of usage occasionally.”

It seems buyers and vehicle dealers play a timing game expecting the treasury to increase taxes. Dealers profit from inventory holding gains and consumers “front load their purchases” in the belief that it will be more expensive if they wait.

Financial institutions who want collateral-based lending options are happy to lend in such a situation.

Three measures are typically taken to discourage vehicle imports, Jafferjee said. High excise duties on vehicles, lowering the loan to value ratio (LTV) and imposing a stamp duty on vehicle financing transactions.

The Indian Ocean island has high excise duties on vehicles, although it has reduced from levels in the past. For hybrids, excise duty is 70 percent for vehicles under 1,000 cc, 80 percent for vehicles under 2,000 cc, and 115 percent for vehicles under 3,000 cc engine capacity.

Small petrol cars have 135 percent duties, and medium-sized petrol cars have 150 percent duties.

“This government has clearly stated in their manifesto that they want an asset owning middle class so there is no logic in depriving a person who saves and buys a vehicle,” he said.

“Issues such as congestion in cities should be addressed through congestion charges rather than duties for it penalises a person in the country side.”

Tariffs above 150 percent should be rationalised to a range between 100 to 150 percent as the market has shifted to hybrids. “Even the luxury cars are hybrids. There is a case to increase electric car duties to a more logical 50 percent,” he said.

A lower loan to value ratio, from the 85-90 percent that firms were giving out loans, could reduce demand, although small car buyers don’t appear to use their full borrowing quota. The central bank on Monday announced reduction of the loan to value ratio to 70 percent.

“Fair enforcement will be a challenge, for vehicles unlike gold are not homogenous. The value is subjective so how is the regulator going to assess whether firms are playing by the rules. Firms can game the rule by declaring a higher value for the underlying collateral,” he said.

Higher stamp duties can also drive up the cost of financing.

Although different countries and communities in the world have different values around importation and use of vehicles, and Sri Lankans are at the high end of the importation spectrum, Jafferjee considers the fundamental problem to be elsewhere.

“Contrary to popular belief, balance of payment crises that this country faces from time to time are not due to vehicle imports but due to a combination of monetary policy and fiscal policy,” he said.

By not allowing a free floating exchange rate and not revising interest rates, Sri Lanka’s central bank promoted an artificial policy of loose credit which, among other repercussions, triggered vehicle imports.

On the irresponsible use of fiscal policies, higher public servant salaries despite huge inefficiencies in the public sector, not collecting enough taxes and under recovery of petroleum taxes drives regular budget deficits that drain savings from productive investments.

“The solution to the BOP crisis is to address fundamental issues rather than meddle with vehicle taxes,” Jafferjee said.