President declares tax concessions
*Fifteen percent surcharge on import duty removed
*Import duty on raw materials, machines reduced
*Three band tariff structure of 5, 15, 30 comes into operation
*Tax on mobiles, cameras, watches, electronics and motor vehicles slashed
In a major step towards simplifying and broad basing the tax structure, President Mahinda Rajapaksa in his capacity as Fiance and Planning Minister has removed the 15 percent surcharge on custom duty with effect from yesterday. The 2.5 percent import duty on most raw materials, plant and machinery has also been abolished to provide a boost to the rapidly recovering post conflict economy. Multiplicity of custom duty structure has been simplified with a four band duty structure of 0, 5, 15 and 30 percent, Finance and Planning Ministry states in a release.
The Government has also slashed duties on motor vehicles by 50 percent in support of the expanding tourism activity and rising level of tourist arrivals. To promote Sri Lanka as an attractive shopping centre for internationally branded products – phones, wrist watches, cameras and electronics have also been brought down below 10 percent of overall taxes.
These items will be liable only for Port Levy and Nation Building Tax and have been exempted from VAT and Cess.
A distortionary cess has also been scaled down to boost domestic activities. Cess will be maintained only for selected imports affecting domestic activities which require safeguards from unfair import competition.
The Government is also working towards providing antidumping legislation, labeling legislation, prescription of quality standards etc to improve the environment for home based industries to further support local value added activities while making raw materials, plant and machinery imports available at zero duty.
As the Government is moving towards a simple tax structure, all essential commodities will be liable at the point of imports only for a special commodity levy. This will minimize the cumbersome administrative procedures particularly for small traders engaged in such import business.
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