Vehicle prices in Sri Lanka are expected to climb sharply following the government’s decision to extend the 50% surcharge on import duties until December 31, which had previously been due to expire on August 15.

According to the Vehicle Importers Association of Sri Lanka (VIASL), the extension will push up showroom prices significantly. 

A Suzuki Wagon R is expected to increase by around Rs. 500,000, a Toyota Raize by Rs. 1 million, a Honda Vezel by Rs. 1.5–2 million, a Toyota Prado by Rs. 3 million, a Land Cruiser by Rs. 5 million, and a double cab by Rs. 2–2.5 million.

Association President Prasad Manage told the media that vehicles currently available in showrooms were imported under Letters of Credit (LCs) opened before May 15, which are exempt from the surcharge. 

However, vehicles imported under LCs opened after May 15 will be subject to the higher duty, leading to price hikes.

“We expected the surcharge would not be extended, but due to various reasons it has been continued. As a result, we can expect further increases in vehicle prices,” Manage said. 

He noted that 90% of vehicles cleared so far were under LCs not subject to the surcharge, but clearing has now begun on vehicles that do fall under the new duty.

Manage added that instead of repeated price changes through surcharges, the government could use alternative tools to stabilize the market, such as revising tax policy, controlling LCs, and implementing fixed rates. 

He warned that continuous surcharges create large fluctuations in the market, while other mechanisms could restrict imports if necessary without causing excessive pricing. (Newswire)

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Opposition MP Mujibur Rahman today accused the government of corruption in connection with the President’s announcement of a surcharge on imported vehicles, claiming that politically connected businessmen benefited from advance knowledge of the Gazette.

Rahman told Parliament that on May 15, a day before the surcharge was announced, 1,782 brand-new vehicles opened Letters of Credit (LCs).

“How was it possible for over 1,700 vehicles to open LCs a day before the Gazette was published? Who do these vehicles belong to?” he asked, alleging that the imports were linked to businessmen close to the President.

He charged that the news of the surcharge had leaked, allowing certain car dealership owners close to the President to benefit.

“This is an organized crime. Before the President could publish the Gazette, dealership owners around him had already opened LCs,” Rahman said.

The MP dismissed the Deputy Finance Minister’s denial of reports that 4,000 LCs were opened, insisting that data until the end of May would confirm the figure.

Rahman further argued that the law was being applied unequally, disadvantageous to those importing used vehicles.

“If laws are being initiated regarding vehicles, they should be equal to all. But the law does not apply to certain businessmen. The President says the law is equal to all, but it is not so. Those who supported the President are now benefitting,” he said.

He accused the government of creating what he called a “crony economy”, designed to benefit allies of the President.

“The President has brought laws to benefit those around him and earn as much as they want,” Rahman charged. (Newswire)

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The Vehicle Importers Association of Sri Lanka (VIASL) has cautioned that the Government’s newly‑imposed 50% surcharge on vehicle imports will push prices up by at least Rs. 1.5 million, worsening affordability for consumers.

VIASL Spokesperson Arosha Rodrigo told the media that the surcharge, announced through a gazette, comes on top of existing customs duties and recent increases in foreign currency rates.

“Vehicle prices are rising at a rate that no one can afford. The new surcharge on top of this is unbearable for vehicle importers. Many vehicles will increase by 1.5 to 2.5 million rupees,” Rodrigo said.

He explained that customs duty for every vehicle, whether personally imported or sold through dealerships, will increase due to the surcharge. “Definitely, there will be a minimum increase of Rs. 1.5 million for vehicles. But it depends on vehicle to vehicle,” he added.

Rodrigo noted that those who had already opened Letters of Credit before May 15 would be spared the surcharge, though they would still face higher costs due to the rising US dollar and Japanese yen.

VIASL warned that the combined impact of the surcharge, currency fluctuations, and the recent 2.5% increase in the Social Security Contribution Levy would lead to significant price hikes across the market. (Newswire)

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Former Minister Ali Sabry has backed the Government’s decision to impose a 50% surcharge on vehicle imports, describing it as a prudent step to protect Sri Lanka’s fragile external sector amid global instability.

“The Government’s decision to impose a 50% surcharge on the import of vehicles, in the midst of escalating global uncertainty and external pressures, is a prudent and timely measure aimed at protecting Sri Lanka’s fragile external sector and preserving scarce foreign exchange reserves,” Sabry said in a statement on social media. 

He welcomed the exemption for Letters of Credit opened on or before May 15, 2026, calling it a fair safeguard. 

“It avoids unnecessary uncertainty, prevents retrospective complications, and protects already embattled importers from further hardship and arbitrary administrative difficulties. In times of crisis, clarity, consistency, and fairness in implementation are just as important as the policy itself,” he added.

Sabry warned that Sri Lanka’s recovery remains vulnerable to global conflicts that disrupt energy markets, trade routes, supply chains, investor confidence, tourism, and financing conditions.

He stressed that smaller, import‑dependent economies pay a disproportionately heavy price for wars and geopolitical confrontations.

“Ultimately, this is precisely why Sri Lanka and other like‑minded nations must continue to urge all parties involved in conflicts to pursue peaceful negotiations, diplomacy, and resolution through dialogue rather than aggression, escalation, and invasions,” he noted, emphasizing that the economic and human costs of war are borne most painfully by ordinary people in vulnerable nations. (Newswire)

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The Ministry of Finance has announced a new tax measure imposing an additional 50 per cent levy on the existing customs duty for imported vehicles.

Under the decision, the current 30 per cent customs import duty on motor vehicles will be supplemented by a further 50 per cent surcharge. 

The measure was formalized through a special gazette notification issued under the signature of President Anura Kumara Dissanayake.

The new levy takes effect from today (16) and will remain in force for a period of three months.

However, the gazette specifies that vehicles for which letters of credit were opened on or before May 15 will not be subject to the additional 50 per cent duty.

Gazette: https://www.treasury.gov.lk/api/file/b5fee09e-8b6d-419e-9b52-54eb0927979e (Newswire)

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