IMPORT LEVY HITS HARD ON ‘DUBAI’ DEALERSHIPS

MBABANE – ‘Dubai’ car dealerships could soon hike their prices as a result of the import levy which increases their business costs.

‘Dubais’, as they are commonly known locally, refer to motor vehicles imported from countries outside Africa, especially Asia. Government recently introduced an import levy on non-Southern African Customs Union (SACU) used vehicles of three and six per cent, respectively.

The levy being collected by the Eswatini Revenue Authority (SRA) was imposed strictly on all motor vehicles being imported into the kingdom from outside the region.

In exercise of powers conferred by section three of the Import and Control Order of 1976, the three per cent of total value gets imposed on every motor vehicle that between six amd 10 years old.

For a motor vehicle that is 11 to 15 years old, a levy of six per cent of free on-board customs value gets charged.
In the E22.97 billion budget for the 2019/20 financial year, Finance Minister Neal Rijkenberg said they anticipated an increase in revenues collected through imposition of the imported motor vehicles levy.

“The levy on imported vehicles is projected to grow from E6 million to E10 million while other licences and other taxes are expected to reach E90 million,” said Rijkenberg.
Reacting to the projections, the common stance among operators of dealerships was to the effect that ‘dubais’ would continue to become more expensive than before the levy imposition.

Promised

They promised to hike prices to cushion effects of the levy, which attracts more business costs.
One of the dealership owners, who preferred to be quoted only as Mohamed, said since introduction of the levy, profitability of the car dealership business had been declining.

Compounded

He said the profit drop would also be compounded by the announcement by government that Value Added Tax (VAT) would also be charged on electricity and the increase in fuel tax by E1.20 per litre among other consumptive taxes. Mohamed said he was worried that the increases would prompt consumers to spend less.
“Entrepreneurs in the ‘dubai’ selling business will have to be determined to thrive because the costs continue to rise,” said Mohamed.

Good

A ‘dubai’ motor services dealer, based at the Matsapha Industrial Sites, who preferred anonymity, said the import levy was not good for their business. He said they were forced to hike prices to accommodate the levy.
The man of Asian origin also projected a drastic decline in ‘dubai’ motor vehicle sales in the long-term as buyers were likely to opt for vehicles produced within the SACU region.    

“The consumers suffer at the end. I doubt that government will generate the projected revenue through the levy because we had no choice but to increase prices,” he said.

The businessman also said they felt like the move was intended to boost the shrinking SACU revenues considering the fact that it was known fact that SACU revenues had been declining lately.

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