Customs unveils new valuation standards for imported vehicles

By David Ebert

The Vehicle Importers Association of Lanka (VIAL) and Sri Lanka Customs held a press conference at Customs House to announce the part implementation of a standardised vehicle valuation system online for imported brand new and reconditioned vehicles.

The system is set to make the process of valuing, clearing and taxation easier and streamlined for the country’s large vehicle importer community and Customs and will also prevent undervaluation of imported vehicles and other import scams.

The new valuations can be viewed on both the VIAL and Customs’ websites where in due course, other models will also be added into the list in the near future. The system will include a depreciation-based ageing system that calculates the value of each individual vehicle based on the year of make, the age of the vehicle and hence the value will reduce accordingly on a six-month basis.

This is part of Sri Lanka Customs’ e-Customs initiative that looks to convert their entire system to a computerised, paperless system.

Elaborating on the new system to the Daily FT, Sri Lanka Customs Additional Director General Revenue and Services M. Puviharan explained: “We have prepared a schedule that will start with the used vehicle importation and now we are starting on Japanese vehicles as most of the vehicles are imported from Japan. So we have accordingly prepared a total of 148 models and accordingly we have fixed the value. The values that we have decided are based on the FOB value for which we add the insurance and freight costs and then arrive at the final valuation and duty and taxes will be calculated based on these figures. According to our schedule where the value of the vehicle depreciates every six months because the older the vehicle the less value it will have.”

Puviharan added that the base values were arrived at using a list of values that VIAL forwarded and which was accordingly studied by a Customs subcommittee which approved the new valuations.

It was stated that this move would not affect an increase in vehicle prices overall but according to VIAL Co-President K. Deekiriwewa, there may be a benefit to the end consumer, but it would be at the vehicle importers’ discretion alone whether this benefit is passed on.

Deekiriwewa stated: “Certainly it depends on the seller and if the seller wants to pass that benefit to the consumer, it is optional. We don’t want to make unreasonable profits. If the duty is reasonable and things take place in a smooth manner and if there are no additional costs such as demurrages and other things, then we can pass on that benefit to the end consumer.”

Director General of Sri Lanka Customs Jagath Wijeweera stated that the most important aspect of this new system would be the maintenance of transparency within the department and to avoid the public criticism that the department has had to face in the past.

“I needed to iron out this situation and that is why quite amicably we decide to come to a sort of plateau with the vehicle importers. This is a win-win situation for both of us and according to the GAT solutions we have to accept the transaction values. It is a very serious thing where we have also agreed to accept the international transaction value of a vehicle but if we accept it as is the Government will lose revenue. It is very dangerous situation for a developing country such as ours and we have come to an amicable solution which will not harm the GAT between the buyer and seller. There will be no more hanky-panky in the vehicle trade in the country as everyone will know the vehicle prices and everyone will get an equal chance. This is the win-win situation.”