Valuation of Used Motorvehicles

Abbreviations used

• CIF – Cost Insurance Freight (Taxable Value)
• I/D – Import Duty
• EXA – Excise duty for vehicles aged more than 10 years
• EX – Excise Duty
• VAT – Value Added Tax
• CV – Cost of Vehicle
• CRP- Current Retail Price
• PM- Profit Margin
• P – Profit
• VBD – Value Before Depreciation

TAX RATES

NON - UTILITY VEHICLES
C.C	I/DUTY	E/DUTY	VAT
0-1000	25%	-	18%
1001-2000	25%	5%	18%
2001 and above	25%	10%	18%

UTILITY VEHICLES
ITEM	I/DUTY	E/DUTY	VAT
Pick ups	25%		18%
Trucks ( 5tons-18.5tons)	10%		18%
Trucks ( above 18.5tons)	0%		18%
Tractors(trucks for pulling semi trailers)	0%		18%
Buses (carrying from 10 passengers )	25%		18%
Land cruiser Hard tops carrying from 10 passengers	25%		18%

STEP. 1

CALCULATION OF THE COST OF MOTOR VEHICLE WITHOUT PROFIT

• P = CV*25%=CV*0.25=0.25CV
• CRP=CV+P
• CRP=CV+0.25CV
• CRP=1.25CV
• CRP/1.25=CV

STEP.2

CALCULATION TO OF PROFIT MARGIN

PM=CRP – CV

STEP.3

CALCULATION OF CIF VALUE BEFORE DEPRECIATION

We remove the tax element from Cost Value

• VBD = CV/1.25/1.18 for vehicles with less than 1000cc
• VBD = CV/1.25/1.05/1.18 for vehicles with more than 1000cc but not exceeding 2000cc
• VBD = CV/1.25/1.05/1.18 for vehicles exceeding 2000cc

STEP.4

CALCULATION OF DEPRECIATION

DEPRECIATION FOR DIRECT IMPORTS
0to <1 year	10%
1 to < 2 years	15%
2 to < 3 years	20%
3 to < 4 years	25%
4 to < 5 years	30%
5 to < 6 years	35%
6 to < 7 years	40%
7 to < 8 years	50%
8 to < 9 years	60%
9 to ≤ 10 years	70%
above 10 years	75%

Depending age of the motorvehicle and basing on the given depreciation rates in the table above the depreciated value will be calculated as follows

DEPRECIATION VALUE = VBD * RATE

CALCULATION OF TAXES

a) Motovehicles with Import duty and VAT only

• I/D = CIF * 25%
• VAT = (CIF+I/D) * 18%

b) Motovehicles with Import duty and VAT but aged more than 10 years

• I/D = CIF * 25%
• EXA = (CIF+I/D) * 20%
• VAT = (CIF+I/D+EXA) * 18%

c) Motovehicles with Import duty ,Excise Duty and VAT

Vehicles with more than 1000cc but not exceeding 2000cc rate is 5% Excise duty, and those with more than 2000cc rate is 10%

• I/D = CIF * 25%
• EX = (CIF+I/D) * 5%
• VAT = (CIF+I/D+EX) * 18%

d) Motovehicles with Import duty ,Excise Duty and VAT but aged more than 10 years

Vehicles with more than 1000cc but not exceeding 2000cc rate is 5% Excise duty, and those with more than 2000cc rate is 10%

• I/D = CIF * 25%
• EXA = (CIF+I/D) * 20%
• EX = (CIF+I/D) * 5%
• VAT = (CIF+I/D+EXA+EX) * 18%

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