Vehicle sale income is not liable for vat.
The exemption has been introduced to the VAT law on value added tax (Amendment) Act No 11 of 2015. The provision is read as follows,
No i & ii of sub item 05 main item 25.
"(5) by the addition immediately after paragraph (k) of that PART the following new paragraph:-
“(l) with effect from October 25, 2014, the import or supply of –
(a) (i)any motor vehicle identified under the Harmonized Commodity Description and Coding
Numbers for custom purposes and liable to the Excise (Special Provisions) Duty under the Excise
(Special Provisions) Act, No. 13 of 1989 on the importation of such vehicle or any motor vehicle liable
to the same duty on the manufacture of any such vehicle;
(ii) any motor vehicle remain unsold as at October 25, 2014, which would otherwise have been liable to
the same duty on the importation or manufacture of the same, if imported or manufactured after
October 25, 2014,
other than any vehicle supplied under a financial leasing agreement entered into prior to October 25, 2014, which are disposed after the repossession of the same by the lessor on which input tax had been claimed;"