Sri Lanka: Minister of Finance Samaraweera Violates the WTO Principles

Blatant violation of the WTO Valuation Agreement and the need to revise the tax system for motor vehicles

by Nagananda Kodituwakku- Apr 16, 2018

( April 16, 2018, Colombo, Sri Lanka Guardian) You may be probably aware that Sri Lanka, being a member of the WTO is required to implement the Article VII (Customs Valuation) of the General Agreement on Tariffs and Trade (GATT) 1994 that compels all member nations to apply the ‘transaction value’ of goods as defined in the Article 1 of the agreement, as the primary basis for Customs value.

However, it is observed that the Ministry of Finance of the Republic of Sri Lanka is adopting an arbitrary taxation system for motor vehicles, that tantamount to patent violation the Articles 1 and 7 (2) of the GATT Valuation Agreement. 

Abuse of citizenry: A personal experience  

I imported a Lexus hybrid car (2013 model) from England in 2014, which was classified under the HS Code 8703.23.53 by the Customs Department of Sri Lanka and a levy of                           Rs 2,008,105.00 was charged at the time (relevant Tax Assessment Notice marked X1 is enclosed).  Having decided to import the identical vehicle of the 2017 model, I made inquiries from the Customs last week and found that a completely arbitrary system of levying tax for motor vehicles has been put in place that is totally inconsistent with the WTO Valuation Agreement referred to above. It has been changed from Transaction Value to a system of taxation based on the Engine Capacity, (1798 cc multiplied by 8000%) which is totally illegal. This method now compels me to pay an exorbitant penal levy of   Rs 14,384,000.00 that is more than 7 times of the tax paid for the identical vehicle four years ago.

Lawmakers disregard the Rule of Law whilst treating citizenry differently

You are aware that, as a public interest litigation activist, I was compelled to initiate legal proceedings in the Supreme Court (SC/Writs/7/2016), against hundreds of members of Parliament and Ministers including you, who have defrauded over 30 million rupees each, by selling the tax-free car permits meant for National Service, for unjust enrichment. The Vehicle Registration Certificate issued by the Department of Motor Traffic for the vehicle imported on the permit issued under your name but registered by a private individual (marked X2) is enclosed herewith as a proof of the fraud that cost the Government over 7 billion rupees.

Since the current fiscal policy adopted for motor vehicles by the Ministry of Finance, manifestly violates GATT Valuation Agreement as cited above, on behalf of all law-abiding citizens, I urge you to introduce a fair and reasonable tax system for motor vehicles with immediate effect.

Please take notice that the failure on your part to adopt a fiscal policy that is consistent with the WTO Article VII would trigger action under WTO Dispute Settlement Process through a contracting party that is also affected by the arbitrary tax system adopted by the Government of Sri Lanka.

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The writer is an  attorney-at-Law & Public Interests Litigation Activist