Colombo: Sri Lanka is offering drastic customs duty cuts to help over 20,000 civil servants import new cars, the finance ministry said on 6 April.
The move was to fulfil an election promise made in 2005.
Senior public officials, including police and military personnel, with over five years of service will be entitled to import a car, sports utility vehicle, or a pick-up truck by paying as little as 25% of the normal tax.
Vehicles are expensive in Sri Lanka which slaps import duties ranging from 250% to 350%.
“We estimate around 20,000 or more public employees will be eligible to import cars under the concessionary tax scheme,” S. H. Samaratunge, director general of the finance ministry, told AFP.
Those with five to 10 years of service can import a $11,500 petrol powered car with 1.3 litre engine capacity by paying 25% of the normal tax.
They could also import a more economical 2.8 litre diesel vehicle up to a maximum value of $16,000 by paying 45% of the regular tax.
“Those eligible must import brand new vehicles,” Samaratunge said.
Car dealers said the limits on the value of cars that could be imported under the concessionary tax scheme will help Indian, Chinese and South Korean brands and edge out the more expensive Japanese and European models.
Sri Lanka does not have its own car industry and most of the imports are second hand vehicles, mainly from Japan and Singapore.
In 2006, Sri Lanka imported 27,000 cars, up from 17,200 in 2005.