Questions were raised both inside and outside Parliament by opposition politicians after customs import taxes on vehicles were increased by 50% from May 16, while 1,782 Letters of Credit (LCs) had reportedly been opened for vehicle imports on the previous day, May 15.
Opposition members alleged that certain leading companies had opened LCs for large quantities of vehicles due to an internal information leak regarding the impending tax increase. They further claimed that those companies were expected to gain unfair profits as a result.
However, an additional clause has now been added to the extraordinary gazette notification issued by President Anura Kumara Dissanayake in his capacity as Minister of Finance regarding the tax revision.
According to the new clause, even if LCs were opened on or before May 15, the 50% surcharge mentioned in the gazette must still be imposed if any amendment is made to the number of vehicles, vehicle identification number (VIN), vehicle details, or technical specifications of the vehicles.
Customs sources explained that companies importing vehicles in bulk usually do not open LCs with engine numbers or chassis numbers included at the initial stage. Those details are generally provided later by vehicle manufacturers. However, the LCs become fully effective only after such numbers are added.
As a result, customs sources stated that all companies that opened LCs on or before May 15 for bulk vehicle imports are likely to be subject to the new 50% tax surcharge.