CMTA calls for urgent budget action to plug Rs. 120 billion revenue leakage linked to 15% depreciation

The Ceylon Motor Traders’ Association has urged the Government to abolish a 15% depreciation allowance on used vehicle imports in the forthcoming budget, citing estimated revenue losses of Rs. 120 billion by September 2026.

The association, affiliated with the Ceylon Chamber of Commerce, argues that the valuation arrangement gives used vehicle imports a tax advantage over brand-new vehicles and wants a unified taxation framework.

CMTA estimates that the mechanism accounted for approximately Rs. 40 billion in revenue losses in 2025. It has renewed its demand for reform after raising the issue through earlier budget proposals submitted via the chamber.

According to the association, the allowance reduces the Cost, Insurance and Freight value used to calculate import duties on used vehicles. It argues that some imports have virtually no mileage and values comparable to new vehicles, making a blanket reduction unjustified.

The association wants stronger oversight of vehicle import valuations and action against practices that undermine duty collection. Its statement did not identify individual importers accused of misusing the arrangements.

CMTA also called for any measures aimed at improving vehicle affordability to apply within a consistent tax framework, rather than favouring one category of imports.

As an alternative if depreciation is retained, it proposed an age-based scale capped at 10%. The association said it had advocated a structured approach since 2013 and continued to present the proposal to successive governments.

Under that approach, the reduction would depend on a vehicle’s age rather than a flat percentage.

The association maintains that predictable valuation rules would improve transparency for importers, consumers and the Government.

It also highlighted manufacturer warranties available with brand-new vehicles, arguing that maintenance costs, repair expenses, after-sales support and reliability should inform policy discussions alongside purchase prices and the wider cost of vehicle ownership.