The Government has reaffirmed that there will be no revisions to the tax component on imported vehicles, despite recent speculation suggesting otherwise.
This clarification comes following the lifting of the vehicle import ban, which was imposed due to the economic crisis triggered by the Covid-19 pandemic.
Denying speculation that the Government was considering a reduction in vehicle import taxes, Deputy Minister of Economic Development Prof. Anil Jayantha Fernando told The Sunday Morning that the existing tax structure had been implemented through a gazette notification and would remain unchanged unless revised by another gazette.
“There are no discussions or plans to reconsider the tax component that is implemented by the gazette,” Prof. Fernando stressed, addressing concerns over reports suggesting otherwise.
His comments come in response to a local media report claiming that the Government was considering vehicle tax cuts to meet a revenue target of Rs. 700 billion. However, Prof. Fernando clarified that the media outlet had misquoted him.
As of 1 February, the import duty on motor vehicles in Sri Lanka stands at 30% of the Cost, Insurance, and Freight (CIF) value, following a 50% surcharge on the previous 20% duty rate.
In addition to import duty, vehicles are subject to other levies including a luxury tax on high-value cars, an 18% Value-Added Tax (VAT), a special import tax based on a percentage of the vehicle’s value, and an excise duty ranging from 200-300%.
The total tax burden on imported vehicles is the cumulative sum of these charges. According to the Sri Lanka Customs National Imports Tariff Guide, the value of a brand-new vehicle is determined by the transacted price if the invoice is issued or certified by the manufacturer. For other vehicles, the valuation cannot be lower than 85% of the manufacturer’s price in the country of export, excluding local taxes.
In this context, when The Sunday Morning questioned a senior official from the Ministry of Finance, the official, who wished to remain anonymous, stated that it was too early to predict vehicle import patterns, numbers, or the impact of the high tax component on the Government’s overall revenue.