• Govt. moves to stop revenue losses in vehicle taxation
• Accurate taxation to be ensured via revised valuation process
• Plan to replace agent-set values with standardised assessment
• Finance Min. working on implementation details

Sri Lanka is to introduce a new valuation mechanism for vehicles as the Government takes steps to combat revenue leakages during taxation of imported vehicles.

Speaking to The Sunday Morning Business, Ceylon Motor Traders’ Association (CMTA) Chairman Andrew Perera revealed that in a bid to tackle manipulative practices concerning vehicle valuation, the Government had announced that it was developing a new system to value imported vehicles.

Elaborating further, he explained that the introduction of this system would help the Government accurately tax all imported vehicles. 

“Taxes on vehicles are based on two systems. One is based on the value and the other is based on engine capacity. When it comes to the value-based system, this system will definitely help,” he said. 

Perera further pointed out that from the Government’s perspective, it was imperative to ensure that there was no room for any manipulative practices concerning vehicle valuation, with the Government having expressed confidence that the new mechanism it was developing could address such issues.  

He explained that the valuation of a vehicle played a significant role in its cost because of the application of taxes such as Customs duties and luxury tax on the value of the vehicle. 

Therefore, Perera stated that it was imperative that the Government had a proper mechanism to value the imported vehicles in order to address discrepancies in taxes levied on similar vehicles and the subsequent loss of revenue to the Government.

“The valuation process must be very properly discussed, implemented, and enforced in order to avoid the loss of revenue to the Government,” he stated. 

Additionally, he explained that the valuation of vehicles had previously been based on values set by agents representing the manufacturers. However, going forward, the plan is for all vehicles imported to Sri Lanka to be valued under the new valuation mechanism.

Perera noted, however, that the Government was yet to disclose the complete details of this new valuation mechanism.

Similarly, speaking to The Sunday Morning Business, Ministry of Trade, Commerce, Food Security, and Cooperative Development Secretary K.A. Vimalenthirarajah confirmed that the Ministry of Finance was developing a mechanism to value imported vehicles in order to prevent revenue leakage from manipulative practices related to vehicle valuation.

However, he declined to provide any specifics of this proposed valuation mechanism on the grounds that he was not directly involved in the process.