By: Staff Writer
January 15, Colombo (LNW): Despite the easing of vehicle import restrictions in Sri Lanka, high taxes have dashed public hopes for affordable car prices, creating significant barriers to imports, MP Dayasiri Jayasekara said.
Speaking to the media, he criticized the government for raising expectations during elections only to impose stringent regulations that make importing vehicles nearly impossible.
Jayasekara highlighted that four key taxes now apply to vehicle imports: taxes based on engine capacity, valuation tax, luxury tax, and an 18% VAT. Together, these taxes have caused vehicle prices to skyrocket, with importers predicting a price hike of up to 500%.
He added that the Central Bank’s insistence on maintaining “artificial vehicle prices” in the local market has further exacerbated the issue, as the government prioritized increasing tax revenue over addressing inflated prices.
Prasad Manage, President of the Vehicle Importers Association of Sri Lanka (VIASL), echoed these concerns, explaining that vehicle import taxes range between 200% and 500% depending on the vehicle.
He outlined that beyond excise duties, other levies, including luxury taxes, customs duties, and the 18% VAT, are calculated based on the vehicle’s value, insurance, and freight (CIF) costs. For some vehicles, cumulative taxes could reach 600%, he said, cautioning buyers against making advance payments before import processes resume.
Initial pricing estimates reveal steep costs. Popular petrol vehicles, such as the Suzuki Every, Toyota Corolla, and Nissan Dayz, are priced at Rs. 1.3 million, Rs. 6.6 million, and Rs. 1.9 million, respectively.
Hybrid vehicles, including the Suzuki Wagon R and Honda Fit, start at Rs. 1.8 million and Rs. 3.5 million, with premium models like the Toyota Prius reaching Rs. 11.3 million. These figures exclude the full impact of layered taxes.
Meanwhile, Sampath Merenchige, President of the Vehicle Importers Association of Lanka (VIAL), called for policy changes to allow the import of vehicles over five years old. Noting Japan’s tendency to phase out older vehicles, he argued that this could reduce costs and expand consumer choices.
Vehicle importers are urging the government to adopt a balanced approach that considers affordability, tax revenue, and market stability. They caution against premature panic as the final taxation structure remains uncertain.
Additionally, the government announced that fuel taxes, effective since January 2024, will remain unchanged. Petrol is taxed at Rs. 72 per liter, super diesel at Rs. 57, and auto diesel at Rs. 50.
With vehicle imports set to resume on February 1, 2025, all eyes are on the government’s final tax policies and their impact on the automobile industry. Importers hope for measures that promote affordability while ensuring market sustainability.
