Monday, December 4, 2023

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Vehicle importers vehemently protest over EV tax relief favouritism

By: Staff Writer

Colombo (LNW): Sri Lanka’s vehicle importers have strongly protested against the government’s move to permit electric and hybrid electric vehicle imports with zero tariff to one company, under the guise of electric and hybrid vehicle assembling in the country.

This decision could deprive the state coffers billions of rupees while causing a massive foreign exchange outflow during the next two-year period, Secretary to the vehicle importers association Sri Lanka (VIASL) Arosha Rodrigo told media conference in colon this week.

In the wake of tax concessions for electric vehicle imports Sri Lanka Insurance Corporation (SLIC) has entered in to a strategic collaboration with Auto Capital Investment (Pvt) Ltd (ACIPL) to provide comprehensive motor vehicle insurance cover along with a warranty cover for five years for brand new electric vehicles imported by ACIPL.

With the aim of extending tax benefits to a leading motor trading company a cabinet memorandum has been put forward by Ministry of Investment promotion to impose a zero (%) customs tariff on the CIF value to import electric vehicles with power up to 500kwor Plugin Hybrid Electric Vehicles (PEHV) up to 3000CC in semi-knockdown (SKD) form for local assembly.

This is for a minimum investment of US$50 million by companies already agreed with BOI or new companies entering into agreements, VIAL sectratry alleged. .

However, there is no value addition required on these vehicles in the first two years, which is designed to benefit a single company (Senok Automobile Assembly Pvt LTD) which is believed to have fulfilled these requirements in 2021, he added.

If this gets approved by the cabinet, this will have a severe impact on our already deteriorating economy affecting our foreign currency reserve as well as the national income, he claimed.

Western Automobile Assembly (Pvt) Ltd (Initially known as Senok Automobile Assembly (Pvt) Ltd) has signed the agreement with BOI on 13/08/2015 to assemble Diesel vehicles of engine capacity from 1000cc to 2000cc.

It is using imported brand-new Semi Knocked down (SKD) units provided by technical collaborator, Volkswagen AG of Germany with an envisaged investment of US $ 26.5 Mn as a local investment.

An eight (8) year tax holiday was granted and thereafter concessionary tax rate of 15% or any tax rate under the prevailing Inland Revenue Law, whichever is less.

The Company has requested from the BOI to implement an all-inclusive “ZERO” percent (0%) flat tariff on CIF value, instead of the existing 30% tariff, for the importation of brand new SKD kits for the assembly of Electric Vehicles, Electric Two Wheelers and Plug-in-Hybrid Electric Vehicles.

As per the Cabinet Decision taken No22/1026/504/04 dated 19/07/2022 and the Extra Ordinary Gazette Notification No.2290/19 published by the Ministry of Finance, Economic Stabilization and National Policies on 27/07/2022.

Claim by Senok Automobile on how the project requirement is fulfilled Senok Automobile Assembly Pvt LTD claims to have fulfilled these requirements via investments made back in 2021.

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