Sri Lanka vehicle imports face a sudden 50% surcharge for three months, raising fears of price hikes and possible extension.
Sri Lanka vehicle imports have been hit with a sudden 50% surcharge on customs import duties under an emergency tax order issued by President Anura Kumara Dissanayake.
The order was issued by the President in his capacity as Minister of Finance, Planning and Economic Development, under Section 10A of the Customs Ordinance.
The temporary measure applies broadly to all imported motor vehicles, including cars, buses, vans, freight vehicles, ambulances, hybrid models, and fully electric vehicles.
According to the official gazette issued on May 15, 2026, the surcharge takes effect from May 16, 2026 and will remain in force for three months.
The policy imposes an additional 50% charge on existing customs import duties, affecting both general and preferential tariff structures.
Officials have said the main objective is to discourage vehicle imports and reduce pressure on foreign exchange reserves during a critical economic adjustment period.
A key exemption has been included in the order.
Vehicle imports can proceed without the surcharge if Letters of Credit were opened on or before May 15, 2026.
This protects transactions already in progress, while placing all new vehicle import arrangements under a sharply higher cost structure.
Speaking to the media, Minister Anila Jayantha confirmed that the measure is strictly temporary and designed to operate only for the three-month period.
However, the broad coverage and immediate implementation have already triggered concerns within the automotive trade over price increases and possible supply disruptions.
Despite official assurances, a reliable source within the top tier of government, speaking on condition of anonymity, indicated that the three-month period may not be final.
The source claimed the measure is likely to be extended beyond the initial period, possibly with revisions or reversals depending on fiscal performance.
The same source suggested that the decision forms part of a broader effort to meet International Monetary Fund-linked economic benchmarks and secure promised financial instalments under ongoing support arrangements.
The source described the move as a “desperate attempt” to align import expenditure controls with IMF expectations.
The source also said the government is under internal pressure to demonstrate fiscal discipline through import compression.
Although this claim has not been officially confirmed, it adds uncertainty to the government’s position that the surcharge will automatically expire after three months.
The policy, which covers detailed HS classifications under customs heading 87.02, is expected to reshape Sri Lanka’s vehicle market in the short term.
With speculation now emerging over possible extensions, stakeholders in the automotive sector remain uncertain whether the measure is only a temporary stabilisation tool or the start of a longer-term shift in vehicle import taxation policy.
