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Vehicle prices go up with VAT - Importers

The prices of imported vehicle would be increased due to the major foreign currency fluctuation with no change in the present situation in tax regime, Chairman of Lanka Vehicle Importers' Association Mahinda Sarathchandra said. 

He said that three vehicle associations including Brand-new Vehicle Importers Association and two other Used Vehicle Importers Associations yesterday met with the Prime Minister Ranil Wickremesinghe and Finance Minister Ravi Karunanayake at the Finance Ministry regarding the increase in the VAT.

 During the discussion the Finance Minister stated that no changes could be made to the tax. He said if there was no change to the VAT before May 2 vehicle prices would be increased by Rs. 300,000 and Rs.400,000. “The vehicle importation industry has faced a huge downfall due to this prevailing economic pattern. 

He said that an importer who imported 100 vehicle would now could import on 30 because of the VAT hike. Yesterday the Prime Minister appointed a committee to solve the legal issues regarding vehicle importation. 

“We have requested the Finance Minister to provide a considerable relief on tax concessions imposed on vehicle imports and the Minister said that is under consideration,” Mr. Sarathchandra said. “The Finance Minister said the earlier tax concessions made more people to buy vehicles and because of that, the number of vehicles on the road had increased causing huge road traffic congestion,” he said. “The main idea of imposing more tax on vehicle import was to limit vehicles put on to the road,” he said. 

When contacted the Brand New Motor Vehicle Importers Association President Gihan Pilapitiya said there would be no duty changes but valuation of brand new vehicles and the Customs Duty should be reviewed. “The prices of brand new vehicles are decided by relevant vehicle manufacturing companies. 

Without considering the manufacture’s price, it is not reasonable to increase the Customs Tax according to Government decisions,” he said. “But according to our knowledge the Value Added Tax (VAT) is not relevant to decide the vehicle price but all the taxes, which had to be imposed, have already being imposed,” he said. (Chaturanga Pradeep)