A new 2.5% tax on imported vehicles, scheduled to come into force on 1 April, is expected to push market prices upward, according to the Vehicle Importers’ Association of Sri Lanka (VIASL).

Speaking in Colombo on Friday (13), VIASL Spokesperson Arosha Rodrigo said the levy, which was included in the 2026 Budget, will be applied at the point of collection by Sri Lanka Customs. He confirmed that imports currently being cleared will not fall under the new charge, limiting its impact to shipments arriving after the effective date.

Rodrigo explained that even a seemingly small percentage imposes a substantial burden when calculated against high vehicle values. “Due to the high value of a vehicle, a 2.5% tax is a significant addition. Simply put, the price of a vehicle worth Rs. 10 million will increase by around Rs. 250,000. Therefore, a notable increase in vehicle prices can be expected with the addition of this tax,” he said.

The association expects retailers to adjust price lists almost immediately once the tax becomes active, noting that the industry operates on thin margins and limited inventory cycles. Despite the anticipated rise in prices, Rodrigo observed that interest among buyers has remained strong in recent weeks, driven by improving consumer sentiment and expectations of future supply constraints.