Update – New Tax structure (table)
Sri Lanka has slashed an import excise duty on vehicles by 50 percent, lifted a general 15 percent surcharge on all imports and slashed duties on electronic items with effect from today.
The slash in vehicle import duty is expected to especially help lift car import numbers to the country as cars are taxed on average 300% upon import.
With effect from today a car such as an Indian made Maruti which had attracted excise duties of up to 183 percent of its value will now be charged a duty of 90 percent, Sri Lanka’s director general of fiscal policy S R Attygala said.
The government expects more revenue from car imports which plummeted last year amid high taxes. Attygala said with a pick up in the economy there was a demand for vehicles including the tourist industry.
Car imports began to fall starting 2007, and in 2009, only 329 cars were registered. Business sources said that the actual tax on cars was even higher due to pricing methods of Sri Lanka customs.
The government has also lifted 15 percent surcharge on all imported items. Several import duty bands had also been adjusted. Current bands of 0, 6, 16, and 28, have been revised to 0, 5, 15 and 30. But Attygala said with the removal of the 15 percent surcharge there was a reduction even in the 30 percent band as earlier a 33 percent was paid with the surcharge.
Meanwhile taxes on items such as watches and camera’s have been brought down to 10 percent to encourage retail trade especially targeting foreigners, he said.