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ECONOMYNEXT – Sri Lanka has relaxed budget proposals slashing Loan to Value (LTV) ratios for car imports and will allow loans up to 90% of the value for electric vehicles and 70% of the value for hybrid cars.

Minister of Finance Mangala Samaraweera in the government budget for 2017 presented to parliament last week proposed slashing the loans given to buy cars to 50 percent of the value from 70 percent.

However, the LTV ratio for motor cars will be relaxed, Samaraweera told parliament during the budget debate, the finance ministry said in a statement.

In the budget-2018 the finance minister had introduced an incentive structure to promote importation of vehicles powered by non-fossil fuel, it said.

Loans could be provided by banks up to 50% of the value for  petrol and diesel motor cars, Samaraweera said.

He had also introduced a new formula for import taxes on vehicles to be levied based on the engine capacity instead of the ad-valorem rate (CIF Value of the vehicle), rationalizing the tax base on vehicles.

Tax concession announced in the budget for imported brand new electric car will be extended to cover the used electric cars, which are not more than one year old, the finance ministry said.

According to a Gazette notification issued by the Minister of Finance Mangala Samaraweera, the duty on used electric cars not more than one year old will be reduced by around Rs1 million.

Consequently, the duty rate applicable to electric vehicles less than one year old will be Rs 12,500.00 per KW of motors below 100 KW.
(COLOMBO, November 16, 2017)


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