• No adjustments needed to existing policy or tax structure
• 2025 budget revenue projections from vehicle imports remain on track

Sri Lanka’s vehicle imports, since the lifting of restrictions on 1 February after nearly five years, are happening in line with expectations and do not require further adjustments, Treasury Secretary Mahinda Siriwardena said.

Speaking at an event organised by Softlogic Stockbrokers on Tuesday (25), he said that the government has been carefully monitoring vehicle import data daily since 1 February when all restrictions were lifted.

“Thus far, I am happy to note that the vehicle import trend is very much in line with expectations. Accordingly, there is no reason to make any adjustments to the existing vehicle import policy framework, including tax structure, at this stage,” he said.

Siriwardena said that for 2025, the bulk of revenue gains are expected to be realised from taxes on motor vehicle imports.

He added that for standard passenger vehicles, there haven’t been major changes in the tax structure, while excise taxes, which are the major vehicle tax item, have remained largely the same except for regular annual indexation.

He noted that VAT exemptions were previously eliminated in January 2024 with other VAT exemptions and the luxury tax threshold was increased which would entail a tax reduction for lower-cost vehicles.

However, he said the only substantive change was the introduction of a 30% customs import duty, which was necessary given the large and potentially destabilising pent-up demand for vehicles following five years without imports.

“I am confident that the 2025 budget revenue projections are well grounded in analysis and will likely be met, much like the previous two years,” Siriwardena said.

During the five years from 2015 to 2019 before the vehicle import ban, the average annual value of vehicle imports was $ 1.2 billion (before taxes). In 2018, $ 2 billion worth of vehicles were imported. If we exclude that year, the four-year average during that period was $ 962 million.