New Vehicle Prices after Budget for 2016

As expected the new government budget for 2016 introduce new valuation system for imported vehicles, this valuation lead to increase prices of imported vehicles by Rs. 200,000 up to Rs. 2.5 million.

The new valuation system was introduced recently taking full option manufacturers price as the tax base and the Finance Minister Ravi Karunanayake said  in budget proposal that this is to further strengthen this process of collecting the payable taxes said that the unit rate of excise duty for the vehicles on the basis of cubic centimeters and duties on the percentage basis on certain vehicles would be revised.

Automobile sellers has indicated the main selling automobiles like Nissan leaf, Suzuki WagonR, Suzuki Alto, Suzuki K10, Toyota Aqua, Toyota Prius and Toyota, Nissan Van prices will be increase as follow

Nissan Leaf Electric Vechile by Rs 2.5 Million

Wagon R by Rs. 400,000/-

Auto & K10 by Rs. 250,000/-

Toyota Aqua by Rs. 500,000/-

Toyota Prius by Rs. 700,000/-

Van by 2.5 Million

Meanwhile, 2016 budget has reduced excise duty to 2.5 percent for the vehicles which are run entirely on Solar, Hydrogen or Helium.

And the Vehicle Entitlement Certificate for each vehicle was also introduced and therefore motor cycle and three wheeler is unchange, Rs.15,000 for a motor car and Rs.10,000 per vehicle for all other vehicles would have to pay as fee

New Vehicle Valuation and tax scheme will increase the prices of vehicles by Rs. 400,000 to Rs. 500,000

As news stated the Customs Director General Jagath Wijeweera inform the customs department is deciding on the value of brand new vehicles instead of accepting the declaration by the importers.

This has decisions has make in the detail investigation on vehicles importers undervalued the vehicle valuation while imports, its including few leading companies too.

This approach has reduced tax incomes to the government which is a considerable amount in total. Therefore the customs has set up valuation committee to determine the value of the vehicle and thereby impose the valuation tax.

The New taxation systems are expected to lead to a vehicle prices increase between Rs. 400,000.00 to Rs. 500,000.00.  But this system will help government to raise their tax revenue to the government.

It is expect to be applies for those who imported and yet to clear them.

 

Factors to Consider before and after implement this New Tax System – Personal Opinion

Before implement this new tax scheme

  1. Makesure it is not to impact to the law budget vehicles which are mostly purchases for the self-businesses or small businesses like three wheels, Small cars for Budget taxi and motor bikes.
  2. Understand the weakness and wholes in old tax systems and make alerts to income tax department or customs to be aware of those lopes whole.
  3. Consider the cost of living index and increase accordingly, rather increase just because of maximise revenue
  4. Take actions against those who violate and get penalties for their wrongful behaviour

After implementation this new tax scheme

  1. Makesure its not harms to low income or middle income class who dreams to buy a small cars or basic model of vehicles
  2. Rectifies all the lopes whole and avoid any fraud to comes in future
  3. Educate importers and customs about the new vehicle import tax system and avoid any under pricing in future
  4. Be tight with rules and regulations and need to take actions against those to violating this new impose tax systems.

Deduction of Income Tax when remittances are made to any person or partnership outside Sri Lanka

Furnishing of Tax Clearance Certificate to Commercial Banks and Authorized Dealers

When outward remittances are made by commercial banks or authorized dealers, they are expected to ensure that the remittances are made in compliance with the tax laws. therefore, you are kindly requested to obtain a Tax Clearance Certificate with regard to remittances mentioned in Part B and forward the same to the respective Bank or Authorized Dealer in order to remit your money.

 

Part A

A clearance certificate is not required in relation to following remittances.

  1. Remittance of sale proceeds of quoted shares owned by non-residents in companies resident in Sri Lanka.
  2. Remittance of dividend paid to non-resident shareholders by resident companies.
  3. Foreign investments by residents of Sri Lanka.
  4. Transportation expenses in relation to freight forwarding, courier services and airline services involving the carriage of passengers and goods.
  5. Payments to expatriate employees which include wages, salaries and other benefits which has been subjected to tax under the PAYF, scheme.
  6. Remittances by export companies in respect of services in relation to advertising and marketing performed outside Sri Lanka.
  7. Remittances by export companies in respect of registration ol trademarks and other legal charges in lieu of such registration incurred outside Sri Lanka.
  8. Remittances in relation to annual subscription for membership of professional bodies, journals, magazines and other publication.

 

Part B

A clearance certificate from the Commissioner General of Inland Revenue is required for the following remittances.

  1. Communication services, which includes telecommunication and internet services
  2. Computer software and information services
  3. Royalties, license and franchise fees
  4. Remittance in respect of foreign loans, capital repayment and interest payments, if such loan has been obtained prior to 01.04.2012.
  5. Remittances to foreign contractors engaged in public and private sector services in Sri Lanka which include design, construction and installation of projects.
    1. Contract payments
    2. Surplus Funds arising from the contracts & projects.
  6. Remittances in respect of services rendered by persons outside Sri Lanka in relation to management services
  7. Remittances on service contracts, which include Human Resources Management and Information Technology Management

 

To obtain the clearance certificate, it is necessary to submit the following documents:

  • Letter of request including the details of sender / receiver, amount of the remittance, and the purpose
  • Copy of the invoice
  • A copy of the agreement and/or any other proof to enable the officers to verify the transaction in relation to the outward remittance

Clearance Certificate will be issued within 24 hours by the International Unit subject to the provision of necessary documents.

If you need more details, please contact to The Commissioner, International Unit 10th floor,  Department of Inland Revenue Colombo 2 or call 0112 135030

Deduction of Income Tax when remittances are made to any person or partnership outside Sri Lanka
Deduction of Income Tax when remittances are made to any person or partnership outside Sri Lanka