• Forex outflow for vehicle importation to be around $ 1,200 m in 2025: Deputy Min. 
• Taxes to be maintained to ensure exchange rate stability 
• $ 12,000 m outflow likely within 2 months if tax reduced, Gunasena warns

The Government has no plans to reduce the current taxation on imported vehicles as it hopes to control the annual outflow of foreign exchange for the purpose of importing vehicles at $ 1,200 million for 2025 in order to ensure exchange stability, according to the Deputy Minister of Transport and Highways.

Speaking to The Sunday Morning Business, Deputy Minister of Transport and Highways Dr. Prasanna Gunasena stated that the Government had no plans of reducing the current taxation on vehicles.

He added that the current levels of taxation were required in order to maintain demand at the levels necessary to ensure exchange rate stability. 

He further stated: “We are expecting the foreign exchange outflow for the year to be around $ 1,200 million and we have been monitoring on a daily basis the amount of Letters of Credit (LCs) that are being opened.”

The Deputy Minister warned that if the tax on vehicles was reduced, Sri Lanka could possibly see an outflow of $ 12,000 million within two months, making the maintenance of the exchange rate at the current levels near impossible.  

He pointed out that despite the relaxation of the vehicle import ban from the end of January, the Government had been successful in maintaining the Sri Lankan Rupee to US Dollar exchange rate at levels below Rs. 300. He further claimed that all vehicles that had been imported had been sold without any issue.

Gunasena asserted that the Government’s decision to relax the vehicle import ban was not driven by an intention to facilitate vehicle imports for the public. Rather, he contended that the decision had been primarily influenced by the need to enhance Government tax revenue.

Furthermore, he claimed that the taxation revenue raised by vehicle imports had exceeded their targets thus far.