‘Prices of some vehicles may increase by almost 50 percent’

Sri Lanka’s finance minister has signed an extraordinary gazette to change the basis on which customs calculates the value of certain motor vehicles, therefore prices of some vehicles may increase by almost 50 percent, car dealers said.

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.
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.

“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 said. – LBO

(Courtesy: The Island)