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Vehicle imports to surpass $ 1 b

Vehicle imports to surpass $ 1 b

17 Nov 2025 | By Imesh Ranasinghe


  • Rs. 1 Tn. increase in tax revenue was Rs. 110 b higher than expected: COPF


Sri Lanka’s vehicle imports are expected to surpass $ 1 billion for the second year in 2026, despite the reduction in pent-up demand, with tax revenue from vehicle imports reaching Rs. 550 billion, the Committee on Public Finance (COPF) said.

In their report on Budget 2026, COPF said that the Rs. 1 trillion increase in tax revenue this year was about Rs. 110 billion higher than expected, driven by taxes on vehicle imports.

Against an expectation for about Rs. 450 billion in vehicle tax revenues in 2025, the ministry of Finance now expects about Rs. 650 billion to be collected, a nearly Rs. 600 billion increase from 2024.

COPF said that such a collection is expected to reduce to around Rs. 550 billion in 2026. This is because only around $ 1.2 billion in vehicles are expected to be imported in 2026, compared with more than $ 1.5 billion this year. 

By late October, the ministry estimated that there was about $1.8 billion in vehicle import LCs opened, with about $ 1.2 billion in imports cleared. Some of the LCs will likely be cleared in 2026.

The report added that about 71% of just over Rs. 700 billion of the Rs. 1 trillion increase in tax revenue in 2026 (Little over Rs 700 billion) was driven by the increase in import duties, VAT on Imports, Excise duty on motor vehicle imports, Luxury vehicle tax, and vehicle entitlement levy.

According to the budget estimates, excise duty on vehicles is estimated to be Rs. 266 billion in 2026, reducing from an expected Rs. 396 billion this year.

Further, the report said that the customs import duty imposed on vehicle imports also included a 50% surcharge on top of the 20% duty. This surcharge made effective customs duty on vehicle imports 30% and was effective for a year from 1 February 2025. 

“So far, there has not been a decision to extend that surcharge beyond February 2026. If the surcharge is not extended, effective customs duty on vehicles will fall to 20% from 30% entailing revenue loss,” the report said.



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