Saturday, March 30, 2013

The lowdown on buying a car in Sri Lanka!

For most people buying a car is a big expense and thus, a big deal. The process of buying a car is no different anywhere in the world. However, it's the things like importation rules, customs duties, excise duties and taxes in each country that are important to note when making a purchase. In this case, Sri Lanka.

I recently went through the process of buying a car. What was key to my decision-making process (other than the one of whether to buy a new vs used car) was factoring in the Sri Lankan motor vehicle rules, duties and taxes because of its impact on price. These duties and taxes hike up the price of cars significantly on the island (as compared to duties and taxes charged in other countries like the UK or US).

Buying a new car is straightforward enough, however, it pays to be cautious when buying a used car.

Speaking with local friends they advised me to be cautious when shopping around used-car dealers and highlighted risks such as tampering of odometers, vehicle documentation etc. The stories were a little surprising (*raised eyebrows*), but I guess its the age-old "don't trust a car salesman" thingy...

The following articles and government pages I found were informative and/or helpful:

Basically, the duties and taxes on imported vehicles is set quite high in Sri Lanka. The last increase in these duties and taxes took effect on 31 March 2012. A summary of taxes for cars based on the 31 March 2012 release by Treasury is set out below:

In effect, the government is encouraging the purchase of hybrid cars over petrol and diesel cars based on the lower taxes set for hybrid cars.

The other important thing to consider is whether you are eligible for any of the licence or special vehicle schemes. Further information can be found on the Ministry of Import & Export Control website. If you are eligible, then this could have significant savings (depending on the criteria set out for that scheme), the age of the vehicle may be older, and some or all of the taxes may not apply. Also note, if you fall into a specific category or scheme you may not be eligible to sell or transfer the car, though it may be possible to re-export the vehicle at the time of your departure from Sri Lanka. In any case, do your research if you are a non-national or resident guest.

I also found this beta version vehicle import tax calculator which proved useful for some car models  (use as a "guide only" as you'll need to factor in currency exchange rate fluctuations and other).

There are a number of websites where you can find advertisements for cars (registered and unregistered). I was told to check out Auto Lanka, though there are also plenty of other websites. 

It is also possible to enter into the Japanese auctions to purchase a car. Just type in "japanese car auctions sri lanka" into your search engine and a number of websites/companies pop up. It's advisable to discuss the auction process, associated costs and do your homework before heading down this path. Shop around!  What I have been told with regards to the japanese car auctions is that there are potential savings to be made at auction, as well as on exchange rate fluctuations. However, you need to factor in other costs such as shipping, commission and other taxes. Also note Sri Lanka's requirement that imported used cars should not be older than two years when imported.

I may write another entry on the pros and cons of buying via the japanese auction as a future entry.

For now, happy shopping!

1 comment:

Anonymous said...

Thank you!

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