THE MARKET
New Vehicle Duty Rate
On May 26th, the government introduced a radical new Unit Rate Tax that will affect vehicle prices according to the engine capacity of individual vehicles. Based on the new circular released by the government, the Ceylon Motor Traders Association (CMTA) issued a press release mentioning that the price of passenger vehicles could increase by as much as 133%. This newly introduced Unit Rate Tax will primarily result a price hike on vehicles with an engine capacity of more than 1000 CC (1.0 L), while vehicles that have an internal combustion engine with less than 1000 CC are expected to see a tax rate reduction in the local market.
Electric cars with lower than 100kW will also see a reduction in duty, which means vehicles like the Nissan Leaf will become one of the more viable options for those looking to purchase cars in the less than Rs. 5Million range. Hybrids however are seeing mixed results, with higher engine capacity vehicles like the Prius seeing significant increases in the Duty rate.
Rohan Philicocq, Manager Imports at Sujaan Freight Services, explained the methods for duty calculation.
"For Petrol, Diesel and Hybrids, there are two methods to calculate duty, with the government imposing whichever is higher. The new method uses the exact engine capacity instead of using a range."
Method 1 (Old way)
(CIF Value x 1.15) xTax Rate
CIF Value: Cost of vehicle plus shipping insurance and freight
Tax Rate: Predefined percentage based on engine capacity groups.
1.15: 15% VAT
Method 2 (New way)
Engine Capacity x Unit Rate
Engine Capacity: Denoted as "CC", is the cubic capacity of the engine.
Unit Rate: Predefined rate based on engine capacity groups.
For Petrol Vehicles:
For Petrol Hybrid Vehices:
Method 1 (Old way) Rates
The tax rates used in the prior duty
calculation remains unchanged. However preference will most likely be given to the new formula as it yields a higher value.
For Diesel Vehicles:
For Electric Vehicles:
For fully electric cars, the duty calculation is as follows:
Battery Capacity x Unit Rate
Battery Capacity: Capacity of battery measured in kW
Unit Rate: Predefined rate based on battery capacity groups.