Vehicle prices in Sri Lanka could rise by 25% as importers warn that new surcharges have sharply reduced LC openings.
Vehicle prices in Sri Lanka are expected to rise by nearly 25% following the government’s new surcharge, while the opening of Letters of Credit for vehicle imports has dropped sharply, importers say.
Speaking to The Sunday Morning Business, Vehicle Importers Association of Sri Lanka Secretary and Media Spokesman Arosha Rodrigo said the market is now facing a significant price increase due to several new developments, including the 50% surcharge imposed on top of customs import duties.
Rodrigo explained that vehicle prices are expected to increase by around 10% due to exchange rate movements. He said another 15% increase would come from the new surcharge, while the Social Security Contribution Levy, or SSCL, would add approximately Rs. 250,000 to the price of a vehicle.
“Prices are increasing by about 10% due to the exchange rate. Another 15% increase will occur due to the surcharge, and the Social Security Contribution Levy will increase the price of a vehicle by approximately Rs. 250,000. Accordingly, overall, the price of a vehicle will generally increase by about 25%,” Arosha Rodrigo said.
Although the 50% surcharge came into effect from May 16, importers continued opening Letters of Credit during the two weeks that followed. Rodrigo said this happened because many importers feared that vehicle imports could be completely banned once again.
However, that fear has now eased, and he noted that a clear decline in the opening of Letters of Credit is currently being seen across the vehicle import sector.
Vehicles purchased after the surcharge was introduced are expected to arrive in the country by next month. Therefore, the real impact of the tax increase on vehicle import capacity is expected to become clearer after those shipments reach the island.
According to an order issued by the Ministry of Finance, Planning and Economic Development, the temporary 50% surcharge has been imposed on several vehicle categories. These include passenger vehicles used for public transport services, motor cars, station wagons, racing cars, special vehicles such as ambulances, and golf carts.
The surcharge is valid for a period of three months from May 16, 2026.
