Sri Lanka Extends 50% Vehicle Import Surcharge Through 2025

The Government of Sri Lanka has extended a 50% surcharge on vehicle import taxes through December 31, 2025. Originally introduced as an emergency measure during the country's economic crisis, the levy is designed to protect foreign exchange reserves and reduce pressure on the Sri Lankan rupee by limiting the outflow of dollars for non-essential imports.

While the country has made progress under an International Monetary Fund bailout programme, authorities are maintaining the tax to ensure macroeconomic stability. The surcharge is stacked on top of existing duties and taxes, creating a compounded cost that is passed directly to consumers.

The Vehicle Importers Association of Sri Lanka warns that the extension will lead to a significant increase in car prices, making personal and commercial vehicles unaffordable for ordinary citizens. Industry stakeholders argue the policy threatens the recovery of an automotive sector already damaged by a 2021 import ban and may eventually reduce government revenue by suppressing sales volumes and impacting spare parts suppliers and repair services.