• Fin. Min. data indicates strong progress, with $ 596 million in LCs opened for imports by May
• Govt. collects $ 1.7 in tax revenue for every dollar spent on vehicle imports

Sri Lanka is likely to meet its Rs. 450 billion tax revenue target from motor vehicle imports by the end of the year, based on the volumes imported and the tax collected, according to Finance Ministry data.

Meeting with the Committee on Public Finance (COPF), Finance Ministry officials stated that Sri Lanka has opened $ 596 million worth of letters of credit (LCs) for motor vehicle imports as of the end of May.

Sri Lanka has imposed a $ 1 billion limit on annual motor vehicle imports in 2025 to balance the foreign exchange outflow and reserve building needed to repay its restructured debt.

Out of the LC values, motor vehicles worth $ 272 million have been imported by the end of May, from which Customs have collected Rs. 139 billion as taxes.

Finance Ministry officials revealed that Rs. 160 billion in tax revenue is expected from the remaining $ 354 million worth of motor vehicles in the pipeline from the LCs opened by the end of May.

Data suggest that for every US dollar spent on importing motor vehicles, $ 1.7 is collected as tax revenue by the government.

Data also revealed that Customs has cleared 16,000 motor vehicles, excluding two and three-wheelers, so far in the year, with an average of 250 motor vehicles cleared daily.

However, when questioned about a possible relief on taxes charged on motor vehicles, as the revenue targets seems to be overachieving, Finance Ministry officials said such a decision cannot be taken at the moment as tax revenue expected are forecasted numbers which could vary in the coming months.