ECONOMYNEXT – Sri Lanka has issued a gazette notice imposing a 50 percent surcharge on the import duty of a vehicles, applicable for one year as imports of personal vehicles were relaxed from February 01.
“By virtue of the powers vested in me under Section 10 A of the Customs Ordinance (Chapter 235) as amended by Act, No. 83 of 1988, I, Anura Kumara Dissanayake, Minister of Finance, Planning and Economic Development of the Democratic Socialist Republic of Sri Lanka, do by this order levy on imported goods specified in the Schedule hereto, a surcharge at the rate of 50% on applicable Customs Import Duty, both General and Preferential basis, with effect from February 01, 2025 for a period of one year,” the notice said.
The general customs duty is about 20 percent for vehicles which would go up 10 percent to 30 percent.
Download the Customs 2422-43-customs-duty-surcharge-EN from here
A gazette was also issued detailing taxes for electric vehicles.
Download the EV tax gazette from 2421-42-Electric-Vehicle-tax-XID-EN here.
A new luxury tax gazette has also been issued, specifying a level of 5 to 6 million rupees per vehicle, which is higher than the earlier level. A higher threshold allows lower cost vehicles to escape the tax.
However from 2019 to now, the exchange rate has also depreciated from around 184 to 300 to the US dollar.
Download the 2421-41-Luxury-tax-LMVT-Jan31-EN here.
Sri Lanka banned the import of over 3000 goods in 2020 after the central bank printed money to target an ‘output gap’ through direct and open market operations. Potential output was based econometric technical advice from the International Monetary Fund.
Sri Lanka has restrictions on imports including through taxes and exchange controls because the central bank has flawed operating framework which trigger forex shortages from anchor conflicts.
The currency is then depreciated under under a de facto policy involving ‘interest rate as the last line of defence’ which the IMF pushes as the’ exchange rate as the first line of defence’. (Colombo/Jan31/2025)
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