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| Sunday, 11 January 2004 |
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| News Business Features Editorial
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Import duty up in addition to VAT for most items by Elmo Leonard Rates of import duty on most categories of goods entering the country have been revised, effective January 1. This corresponds to the new Value Added Tax (VAT) also coming into force at the beginning of the year. This revision has caused confusion in the minds of the business community about pricing produce and products which enter the retail trade. With VAT coming into force, January 1, prices of certain categories of items have decreased, while their import duty rates have gone up. "This is akin to robbing Peter to pay Paul," consumer Paul Perera from Wattala said. Subsequent to such changes, the resulting revisions in cost of living during the immediate weeks ahead is an unknown factor, management and tax consultant, M. Thiyagaraja, pointed out. The third influence which would add to this uncertainty over the cost of goods and subsequently, the cost of living, is the present decreasing value of the rupee, against the Dollar, Euro, Pounds Sterling, Yen and other international currencies, Thiagaraja said. The importer could now inquire about the new rates of import duty on goods from the Customs or purchase a book containing the relevant data at a cost of Rs. 1,500. A top Customs bureaucrat told Sunday Observer that the price of dhall and lentils would increase. The new import duty on dhall is 3 per cent down from the earlier 5 per cent. The VAT now stands at 15 per cent, from 10 per cent, earlier. The import duty on dry fish has been reduced to 6 per cent, from the earlier 10 per cent, while the VAT for the same commodity which stood at 10 per cent has gone up to 15 per cent. Sugar, for which the present duty is Rs 4.50 per kilogram, has gone up from Rs 3.75 per kilo, earlier. The VAT, on sugar is now 15 per cent, from 10 per cent, earlier. Tax on the import of edible oil has increased to 20 per cent from 15 per cent, earlier. VAT, on vegetable oil is 15 per cent, down from 20 per cent, earlier. The international price of palm oil which was lower in price during most part of 2003 than coconut oil, produced locally, is imported and substituted with coconut oil, before it reaches the consumer. The prices of textiles or fabrics, vital for the country's gigantic export apparel trade, remains at duty rate. But, VAT, which stood at 20 per cent, has been reduced to 15 per cent, which would help make Sri Lanka's garment exports competitive. The import duty on tyres, which stood at 25 per cent, has now been increased to 27.5 per cent, VAT has come down from 20 to 15 per cent. Crude oil imports remain free from both duty and VAT. The imports of pharmaceutical and ayurvedic raw materials also remain free from VAT and import duty. Import duty on footwear, is now 27.5 per cent, from the earlier 25 per cent, or in both instances, Rs 100 per pair, whichever is higher. VAT for footwear has decreased to 15 per cent from 20 per cent. The rate of surcharge on Customs duty on some imported goods which was 20 per cent, is now 10 per cent and, with a few exceptions, it has been increased to include 16 categories, from the existing 13 classifications, an example being cement, where the surcharge is scrapped, while earlier packed cement entailed a 20 per cent surcharge per 50 kilogram pack. This augurs well for the construction industry, which would enjoy a boom, if the running political crisis is solved. Plastics, needed for industrial purposes, such as moulding of chairs, now come under a 3 per cent import duty structure from the earlier 2.5 per cent VAT on plastic has come down to 15 per cent. Import duty on televisions (and spare parts) has increased from 10 to 12 per cent, but VAT rate has come down to 15 per cent. Mobile phones come under a new 3 per cent duty structure from the 2.5 per cent, earlier. VAT, for cellphones has been scrapped, from the earlier 20 per cent, but a levy of Rs 300 per mobile phone per year is charged. Import duty on computers and computer spare parts which is increasingly used for business, administrative and educational purposes, has also been increased from 2.5 per cent to 3.0 per cent VAT has also been increased from 10 to 15 per cent The import of books remain duty and VAT free. A recent newspaper report revealed that the increase from 10 to 15 per cent on meat and poultry products would not affect the consumer as they are produced by small-scale producers, who do not pay VAT. Thiyagaraja, however pointed out that most consumers within urban areas prefer purchasing better known brands of broiler chicken and whose producers pay VAT. |
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