Sri Lanka has imposed a 50% surcharge on the customs import duty applicable to vehicles for a period of three months, the Ministry of Finance announced on Saturday, in a sharp tightening of the country’s recently reopened motor-vehicle import regime.
The temporary surcharge was issued through an extraordinary gazette under Section 10A of the Customs Ordinance (Chapter 235) as amended by Act No. 83 of 1988, signed by President and Finance Minister Anura Kumara Dissanayake. It applies on top of the existing customs duty — for example, the 30% duty applicable on a motor car is supplemented by a further 50% levy on that duty, NewsFirst reported. The surcharge applies on both General and Preferential duty bases.
The Ministry said the additional duty took effect from 16 May and will remain in force for three months. Vehicles for which Letters of Credit were opened on or before 15 May are exempted.
The order covers an extensive schedule of vehicles, including public transport vehicles designed to carry ten or more persons, motor cars, station wagons, racing cars, ambulances, prison vans, hearses, motorhomes, golf cars, jeeps, vans and goods transport vehicles. The schedule spans engine types — diesel, semi-diesel, spark-ignition, hybrid and fully electric — and various cylinder-capacity and age classifications.
The surcharge is the first material policy brake on Sri Lanka’s post-restriction vehicle import wave. Vehicle imports surged to Rs.195 billion in Q1 2026, a 900% jump year-on-year, and registrations hit an all-time high in March on a pre-tax rush. The wave has coincided with sharp pressure on the rupee, with the CBSL middle rate weakening to Rs.331 — its weakest since December 2023 — and retail TT rates touching Rs.332.
The measure drew cross-party endorsement later in the day. Former Foreign and Finance Minister Ali Sabry, of the SLPP, described the surcharge as “a prudent and timely measure aimed at protecting Sri Lanka’s fragile external sector and preserving scarce foreign exchange reserves” in a statement on social media. Sabry also welcomed the carve-out for Letters of Credit opened on or before 15 May, calling it “a fair safeguard” that avoided “retrospective complications” and protected “already embattled importers from further hardship.” He argued that smaller import-dependent economies paid a disproportionate price during global geopolitical shocks and that clarity and consistency in implementation mattered as much as the policy itself.
Industry pushback came almost immediately. Vehicle Importers Association of Sri Lanka (VIASL) Spokesperson Arosha Rodrigo told Newswire that the surcharge would push prices up by “a minimum of Rs. 1.5 million” per vehicle, with some models rising by as much as Rs. 2.5 million once compounded with the recent dollar and yen appreciation and a 2.5% Social Security Contribution Levy increase. “Vehicle prices are rising at a rate that no one can afford. The new surcharge on top of this is unbearable for vehicle importers,” Rodrigo said. He confirmed that pre-15 May Letter-of-Credit holders were spared the surcharge but would still face higher costs from currency depreciation.
Deputy Finance Minister Dr. Anil Jayantha pushed back against social-media claims that the measure amounted to a 150% tax increase, describing such characterisations as “completely false.” Jayantha said existing taxes on vehicle imports already stand at around 130% and that the temporary surcharge was a foreign-exchange-management tool, not a revenue measure. “The message we are giving is simple: if you can postpone importing a vehicle for personal use, please do so. This is not a move intended to increase vehicle prices,” he said, urging consumers not to rush into purchases on rumours of further hikes. He confirmed that motorcycles, three-wheelers and commercial-use vehicles are excluded from the surcharge.
The Ministry of Finance on Monday narrowed the LC exemption, clarifying that any amendment made to a pre-15 May Letter of Credit after that date — including changes to the number of vehicles, vehicle identification number, vehicle details or technical specifications — will pull those imports back into the 50% surcharge net, NewsFirst reported. The clarification closes a workaround that could have allowed importers to keep the pre-gazette LC date while re-papering orders against new vehicles.
Opposition Leader Sajith Premadasa later attacked the surcharge directly, contrasting it with NPP campaign assurances. Speaking to reporters in Tissamaharama after visiting Ven. Magama Mahanama Thero, Premadasa said leaders who had once promised to make a Vitz car available for Rs. 1.2 million had now moved to impose an additional 50% tax on vehicles. He questioned Anil Jayantha’s assurance that prices would not rise and said the President, government and 159 NPP MPs should take responsibility for the consequences. Premadasa also tied the policy to the rupee’s recent slide, warning that continued depreciation would feed inflation and the cost of living, and urged a stronger push on exports, tourism, remittances and Foreign Direct Investment to stabilise the external account.
Sources: Ada Derana, NewsFirst, Newswire — gazette, Newswire — Sabry endorsement, Newswire — VIASL warning, Newswire — Deputy Finance Minister clarification, Newswire — Sajith Premadasa criticism, NewsFirst — LC amendment clarification.
