Finance Minister Mangala Samaraweera, while further relaxing the policies announced in the Budget – 2018 on the importation of vehicles, has also revised the policy on Loan to Value (LTV) ratio on the financing for purchase of vehicles under lease basis.
Finance Minister Mangala Samaraweera making the winding up speech in the second reading of the Budget -2018 debate also announced details on the procedure for collecting VAT on the sale of Condominium housing units and the removal of restrictions on the foreign ownership on the shipping and the freight forwarding agencies.
Accordingly, individuals who have already opened Letters of Credit in their names to import vehicles prior to November 09 will be allowed to clear those vehicles at the rate of the duty that prevailed before the budget. However, these vehicles should be cleared before April 30th 2018.
Further, the tax concession announced in the budget-2018 for the imported brand new electric car will be extended to cover the used electric cars, which are not more than one year old.
According to a Gazette notification issued by the Minister of Finance and Mass Media Mangala Samaraweera, the duty of the used electric cars that are not more than one year old will be reduced by around Rs One million. Consequently, the duty rate applicable to electric vehicles (Less Than One year old ) will be Rs 12,500.00 per KW power of the motor of the electric car which is less than 100 KW power.
In the budget-2018 the Finance Minister had introduced an appropriate incentive structure to promote importation of vehicles powered by non-fossil fuel. He had introduced a new formula for import taxes on vehicles to be levied based on the engine capacity instead of the ad-valorem rate (CIF Value of the vehicle) rationalizing the tax base on vehicle. In addition, the Loan to Value (LTV) ratio for motor cars which is 50:50 at present will be further relaxed for Hybrid vehicles.
The Loan to Value Ratio will be revised and the Finance facilities could be provided by banks up to :-
50% of the value – for Petrol and Diesel Motor Cars
70% of the value – for Hybrid Cars
90% of the value – for Electric Cars
VAT liability on sale of Condominium Housing Units
The sale of Condominium housing unit will be liable for VAT from 01.04.2018. However, sale under a sales agreement entered in to, before 01.04.2018 will not be liable for VAT.
Duty on locally assembled vehicle will remain as 30% and not 40 percent as announced in the budget on November 09