Sri Lanka revises domestic ‘value addition’ criteria of assembled vehicles
The government of Sri Lanka has reportedly revised the domestic ‘value addition’ criteria of assembled vehicles following discussions with the industry and related state agencies, the Government Information Department has stated. The decision was reached after the Cabinet of Ministers had approved a proposal by Sri Lanka’s Ministry of Industries.
Local media reports have stated that in any country domestic assemblers import ‘completely knocked down’ vehicles, usually of an existing brand for sale in a protected market resulting in massive tax losses to the state, and collect the tax, engaging in tax arbitrage.
The Treasury can recover part of the taxes through an excise tax, the report noted.
The Ministry of Industries had submitted a new ‘Standard Operating Procedure’ with a ‘Local Value Addition Matrix’ to the Cabinet of Ministers.
According to the local media, the matrix had been developed with “government authorities and the consent of industrialists.”
The Cabinet had given approval.
OSL take:
The tax revisions to assembling vehicles in Sri Lanka is positive sign for the automotive industry in the country. Despite the ban on importing vehicles, the proposed revisions would help the country’s automotive industry. In fact it is a growing business in Sri Lanka showing great potential. Foreign businesses/investors could look at forming partnerships/joint ventures with local companies to engage in Sri Lanka’s automotive industry.
| Article Code : | VBS/AT/20210120/Z_6 |