Govt. loses billions due to exporters under-valuing vehicles: Eran

2017-11-13 09:09:24

The government loses billions of rupees in terms of revenue to its exchequer due to tax evasion by some vehicle importers who import luxury vehicles under the used vehicles category, a minister said yesterday.

State Finance Minister Eran Wickramaratne told Daily Mirror the government had identified the loss of revenue that had taken place and taken precautions to avoid such losses from recurring through the budget for 2018 by the introduction of taxation based on the engine capacity of vehicles to avoid tax dodging by importers.

“Taxation is calculated according to the declared value of imported vehicles currently. Which means if it is valued at a lower rate, the amount of tax payable also becomes less,” he said.

The State Minister said the government had estimated the loss of revenue as a result of this to be running into billions of rupees.

Meanwhile, industry sources said even vehicles such as a Range Rover, Mercedez Benz, Audi, and BMW are imported in this manner. Industry sources said these unauthorized importers bring down “Brand New” cars hiding behind the used car qualification, completely manipulating the tax provisions allocated for a genuine used car by the government.

According to sources, the current used car declaration by Sri Lanka customs saying a vehicle has to be registered in the country of export does not outline the period, mileage etc. The source said this loophole created room for some importers to bring down brand new cars in the guise of them being used cars and enjoy the benefits provided for importers of used vehicles.

It is learnt that a loss of Rs.9 billion was reported during 2015- 2017 period as a result of such practises. “These unauthorized importers claim a 20 per cent VAT refund from the UK government at the time of exportation. They are also able to claim an electric/ hybrid subsidy which is offered by the UK government when purchasing environmentally friendly cars. They also get a tax concession of 15

per cent from the local customs for importing a used vehicle whereas these vehicles are not used vehicles but brand new,” the source said.

  Comments - 26

  • Snowy Monday, 13 November 2017 09:16

    Yes, you are right. This was possible when the gear wheels meshed. Now the main gear is gone, I hope.

    Reply : 0       14

    Rifa Monday, 13 November 2017 09:18

    Any relief for the vehicles already arrived to ports before budget?

    Reply : 0       8

    baloney Monday, 13 November 2017 09:24


    Reply : 4       70

    MP Monday, 13 November 2017 10:21

    Superb question!

    Reply : 0       30

    Mo Monday, 13 November 2017 09:26

    Tax is also very high for brand new cars even it is not luxury one. Only politicians and government servants get duty free cars.

    Reply : 0       42

    mnsmart Monday, 13 November 2017 13:34

    Now people can get CARTS.

    Reply : 0       6

    Snowy Monday, 13 November 2017 09:32

    Just a mild reminder, the government loses a large revenue due to duty free cars to MP and selected government servants who do no service to the country.

    Reply : 1       40

    MP Monday, 13 November 2017 10:22

    Timely reminder!

    Reply : 0       18

    Yehiya Monday, 13 November 2017 09:54

    vehicle import is making mess to poor public transport commuters in city. Please introduce some taxes who is entering to city with single passenger in peak time.

    Reply : 7       12

    BuffaloaCitizen Monday, 13 November 2017 10:08

    Did you discover this only now? How many years more will you need to bring in laws to overcome this? This is just gallery talk but no action.

    Reply : 1       15

    cheers Monday, 13 November 2017 10:13

    elections are closer and blame Rajapakse for that too the only excuse UNP has and will have but no progress

    Reply : 4       12

    fareed Monday, 13 November 2017 12:06

    Rajapakshe is the root of all evil.

    Reply : 6       5

    ceylon Monday, 13 November 2017 10:21

    governmebt is cheating people with high tax.people pay government reasonable tax.thats the truth. via DM Android App

    Reply : 1       11

    Rasheed Monday, 13 November 2017 10:37

    When the vehicle is under valued, then what the valuation department is doing?.Importers knows how to manipulate the engine capacity.

    Reply : 0       8

    SS Monday, 13 November 2017 10:43

    Just effing make a car in Sri Lanka and we will save the billions plus our people will afford a descent ride plus our youth will get some jobs.But no creating a new constitution is all you are obsessed with

    Reply : 1       7

    daham Monday, 13 November 2017 11:12

    Not because the government loosing trillions due to Bond Isssue?

    Reply : 0       3

    Arnold Monday, 13 November 2017 11:13

    The main drain of foreign exchange is the vehicle import permits. IF THAT IS STOPPED TRILLIONS COULD BE SAVED.

    Reply : 0       3

    fareed Monday, 13 November 2017 11:26

    The fact is that Srilankan government doesn't tax, it plunders the importers where corruption rules. In fact, these kinds of tax system should be made reasonable.

    Reply : 0       1

    jaliya Monday, 13 November 2017 11:46

    How about a reasonable tax on all importers including those who work for the government. Public cannot pick the tab for your paychecks and unreasonable perks. If the taxes were fair enough people may want to pay the taxes rather avoiding. Don't act stupid even your brain is the size of a orange seed use it

    Reply : 0       3

    Sanath Monday, 13 November 2017 13:45

    Quite agree with "Snowy's" comments. The useliess politicos get all the benefit at the expense of general public, and also make millions by selling off the permits/vehicles etc.

    Reply : 0       5

    rohantha Monday, 13 November 2017 13:48

    Ah Mr Minister!!!!! So you dont loose a Single Cent when Politicians bring their permitted vehicle and sell to other people. What a joke

    Reply : 0       5

    Jagath Monday, 13 November 2017 14:23

    That's a rubbish finding. Unlike the previous government, this government has introduced a fixed tax for vehicles whether it`s brand new or used one, so what`s then this rubbish talk about?

    Reply : 0       2

    Dee Monday, 13 November 2017 15:04

    All do this. It's the only benefit the rich guys can get. Because all you people focus on the poor and leave out the rich. Just let it go.

    Reply : 1       1

    Be Fair Monday, 13 November 2017 18:19

    Wonder what the importers have to say about this robbery? as good as the bond scam

    Reply : 1       3

    ravicsam Monday, 13 November 2017 20:01

    Duty free cars for all should be by a just government.Earn the revenue by way of operational costs. Compulsory comprehensive insurance as per valuation report.Earn revenue through traffic fines.Earn revenue through emission tax as per hydro carbon content.Provide proper roads to adhere to rules.

    Reply : 0       1

    Sambo Tuesday, 14 November 2017 10:18

    yes because ministers are helping the and getting kick backs.

    Reply : 0       0

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