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moreYou can lose more than double that you think!
Buy a brand new Mercedes Benz off-the-shelf for P 1 million, use it for 4 years and sell it for P 600,000.
You think you lost P 400,000 and you further think that you are fine with that loss or “expense” for using it for 4 years – P 100,000 a year.
In reality, your loss is not only P 400,000 but also another P 313,500 (more than 75%) because of additional taxes that you will pay for expensive cars plus the other P 200,000 (50% more) for lease interest, if you lease at 5% flat interest. So, your loss or “expense” for using it for 4 years is P 913,500 or P 228,375 per year. It is not P 400,000 loss but P 913,500 loss.. This is more than double than what you normally think. Here is the calculation in Botswana Pula :-
|
Description |
Purchase | Sale | Loss |
|
Purchase/Sale Price of big car |
1,000,000 | 600,000 | 400,000 |
| Less: Deemed Cost | (175,000) | (175,000) | |
| Add: Disallowed Costs | 175,000 | ||
| Disallowed Costs | 825,000 | 600,000 | |
| Tax percentage | 22% | 22% | |
| Tax paid for expensive cars | 181,500 | 132,000 | 313,500 |
| If you lease it at 5% flat interest | 200,000 | 200,000 | |
| Total loss / “expense” for 4 yrs | 913,500 | ||
| Total loss / “expense” for 1 yr | 228,375 | ||
| Total loss / “expense” monthly | 19031 |
Please think twice before you buy. You get taxed not only for the excess of purchase price but also for the excess of sale price.