Lakmal De Silva Chief Officer, Automobile Gross sales, David Pieris Motor Firm (Lanka) Ltd; Mahen Thambiah, Chairman, Kia Motors Lanka Ltd.; Gahanath Pandithage, Managing Director, Diesel & Motor Engineering PLC (DIMO); Andrew Perera, Chairman, Ceylon Motor Merchants Affiliation (CMTA.; Nalin Welgama, Chairman, Superb Motors (Pvt) Ltd.; Charaka Perera, Group Chief Working Officer, United Motors Lanka PLC; Tarindra Kaluperuma, Director, Stafford Motors (Pvt) Ltd.; and Jawahar Ganesh, Group Managing Director, Related Motorways (Non-public) Restricted
The Ceylon Motor Merchants’ Affiliation (CMTA), established in 1919 is essentially the most senior automotive affiliation in Sri Lanka affiliated with the Ceylon Chamber of Commerce, is looking for larger consistency, transparency and equity within the insurance policies governing the nation’s automotive sector, stressing {that a} sustainable automobile import framework should guarantee a degree taking part in area throughout the complete business.
The Affiliation’s issues come at a time when the automotive sector continues to function beneath important fiscal and regulatory pressures, with current coverage measures, together with the introduction of a 50% surcharge on autos, including additional complexity to an already difficult market. Whereas the CMTA recognises the Authorities’s must handle overseas change, generate income and regulate automobile imports responsibly, it believes that such measures should be structured in a fashion that doesn’t disproportionately drawback authentic companies or distort competitors between completely different segments of the market.
On the centre of the Affiliation’s issues is the continued utility of a blanket 15% depreciation on the Price, Insurance coverage and Freight (CIF) worth of used automobile imports for obligation calculation functions. The CMTA maintains that this mechanism creates an unintended benefit for sure used automobile imports, notably when autos coming into Sri Lanka as used models might be just about an identical to brand-new autos by way of mannequin, specification and, normally, mileage.
The Affiliation estimates that the prevailing depreciation mechanism resulted in roughly Rs. 40 billion in misplaced to authorities income in 2025 alone. With out corrective motion, an identical degree of income leakage might happen in 2026, representing a major loss at a time when authorities income stays important to strengthening public funds and supporting nationwide growth.
The difficulty, the CMTA emphasises, will not be about limiting client alternative or opposing the used automobile market quite, it’s about making certain that autos coming into the nation are assessed pretty and constantly, based mostly on their precise worth and circumstances. When two considerably an identical autos can appeal to completely different ranges of taxation just because one has been registered abroad earlier than being imported, the Affiliation believes the ensuing disparity warrants coverage reconsideration.
The CMTA argues that the identical precept of equity must also apply when contemplating the impression of newer fiscal measures, together with the current 50% surcharge. Such a considerable further price can have implications throughout the automotive worth chain, affecting automobile costs, client affordability, enterprise viability and the broader ecosystem supporting automobile gross sales and after-sales companies.
For authorised automobile importers, the impression extends past the preliminary sale of a automobile. These companies spend money on showrooms, service centres, technical tools, coaching and buyer help whereas using technicians, engineers, gross sales professionals and different personnel. Additionally they function by established and traceable techniques, contributing by taxes, duties, EPF, ETF and different statutory obligations.
This broader contribution, the Affiliation says, must be thought-about when creating automotive coverage. A regulatory surroundings that locations a disproportionate burden on compliant and clear companies, whereas permitting different segments to learn from valuation concessions or structural benefits, dangers undermining the very ecosystem that helps shoppers after they buy a automobile.
The CMTA additionally factors to the broader penalties of income leakage. Each rupee foregone by an avoidable tax concession represents income that might in any other case contribute in the direction of public companies, infrastructure and financial growth. The Affiliation due to this fact believes that affordability shouldn’t be pursued by measures that arbitrarily favour one class of car over one other, notably the place these measures can create substantial losses to the Treasury.
As an alternative, if the coverage goal is to make autos extra accessible to shoppers, the CMTA believes that this must be achieved by a clear and constant framework that considers the complete automotive market. Such an method would permit the Authorities to stability client pursuits with the necessity to defend income and keep a sustainable business.
The Affiliation has beforehand advocated for a structured depreciation framework based mostly on the precise age of a automobile quite than a blanket 15% concession. Underneath an earlier proposal, depreciation could be calculated in accordance with an outlined scale and capped at a most of 10%, offering a extra clear mechanism that higher displays the precise depreciation of a automobile whereas lowering alternatives for misuse.
The CMTA believes this precept stays related at this time. If any concession is to be maintained for used automobile imports, it must be based mostly on goal standards equivalent to automobile age and will apply inside a clearly outlined and constantly administered framework. Automobile valuation ought to finally mirror real transaction values, making certain that companies competing in the identical market are topic to equitable therapy.
The Affiliation additional stresses {that a} degree taking part in area is crucial not just for companies, but in addition for shoppers. Model-new autos bought by authorised channels sometimes include producer warranties and structured after-sales help, serving to shoppers handle upkeep and restore prices through the guarantee interval. These advantages contribute to longer-term reliability, entry to real components and larger peace of thoughts for automobile homeowners.
In opposition to this backdrop, the CMTA is urging policymakers to take a look at automotive taxation and import regulation from a holistic perspective quite than addressing particular person segments in isolation. The target, it says, must be to create a framework by which brand-new autos, used imports, authorised distributors, impartial companies and shoppers can take part in a clear and aggressive market.
Such a framework would additionally assist strengthen confidence within the sector by lowering inconsistencies in valuation, limiting alternatives for exploitation and making certain that taxation is utilized in accordance with clear and predictable rules. Higher transparency would profit authorities income, authentic companies and shoppers alike.
The CMTA acknowledges the Authorities’s duty to guard the nation’s financial pursuits and handle the challenges related to automobile imports. Nonetheless, it believes these aims might be achieved with out creating pointless disparities inside the automotive business.
As Sri Lanka continues to rebuild its financial system and strengthen public funds, the Affiliation is looking for automotive coverage to be guided by a easy however basic precept: truthful therapy should apply throughout the complete business. Eradicating unjustified valuation benefits, reviewing the impression of serious new surcharges and establishing clear guidelines based mostly on real automobile values would, within the CMTA’s view, present a stronger basis for a sustainable automotive sector.
In the end, the Affiliation believes {that a} wholesome automotive business shouldn’t be outlined by which phase receives the best benefit, however by whether or not each authentic participant operates beneath truthful, clear and constantly utilized guidelines. A degree taking part in area, it maintains, is crucial to defending authorities income, supporting accountable companies and delivering larger worth and confidence to Sri Lankan shoppers.
