Sri Lanka’s vehicle imports down depriving of tax revenue to the state

Sri Lanka’s vehicle imports down depriving of tax revenue to the state

14 August 2019 08:45 pm

Sri Lanka’s vehicle imports came down to great extent thereby decreasing the tax revenue due to several new tax proposals which were put forward through the budget 2019 to boost the government revenue.

Shattering those expectations, the revenue generated from motor vehicles significantly declined by 46.2 per cent to Rs. 40 billion in the first four months of 2019, which was 16.5 per cent of the total annual estimate for 2019.

This drop was mainly due to reduction of imports of motor cars by 70.2 per cent stemming from the restriction imposed on cash margin for the establishment of Letter of Credits (LCs).

The temporary suspension of the establishment of LCs for the importation of motor vehicles under the concessionary permit schemes has also contributed to low revenue .

Vehicle imports also affected by the upward revisions of excise duty rates in August 2018 on motor vehicles with engine capacity less than 1000cc as measure of controlling the foreign currency outflow..

Meanwhile, excise duty rates on motor vehicles were also revised to address the issues of tax anomalies and make market affordability in line with the Budget 2019.