By: A Special Correspondent
September 01, Colombo (LNW): Sri Lanka Customs has once again detained over 1,000 BYD electric vehicles imported into the country, citing fresh allegations of motor capacity misrepresentation for the purpose of tax evasion.
This follows a similar issue earlier this year involving the same importer, John Keells CG Auto Pvt. Ltd., and the BYD ATTO 3 model.
According to customs sources, the newly detained vehicles include a mix of BYD models: approximately 450 ATTO 3 vehicles, 250 Dolphin vehicles, 200 ATTO 1 vehicles, and 100 ATTO 2 vehicles. Authorities allege that these vehicles were declared with reduced motor capacities, resulting in significantly lower tax payments.
This latest action stems from suspicions that, as with the previous case, the motor capacities of the vehicles were understated. For instance,
– the BYD ATTO 3, originally equipped with a 150kW motor, was declared as 100kW;
– the Dolphin Dynamic, with a 70kW motor, was declared as 49kW;
– the Dolphin Premium, also a 150kW vehicle, was presented as 99kW;
– the BYD M6, with a 120kW motor, was listed as 100kW; and
– the BYD Seal Dynamic, similarly, was declared as 100kW despite a 150kW motor capacity.
This mirrors the earlier controversy surrounding nearly 1,000 BYD ATTO 3 vehicles imported by John Keells CG Auto Pvt. Ltd. In that instance, the importer argued that although the physical motor capacity was 150kW, the vehicles had been configured via “firmware” to output only 100kW, and therefore qualified for a lower tax bracket. However, Sri Lanka Customs maintained that tax is levied based on the actual motor installed in the vehicle, regardless of any software limitations.
In July 2025, following legal proceedings, a temporary agreement was reached between the importer and Sri Lanka Customs. The court permitted the release of the earlier batch of vehicles upon submission of a bank guarantee equivalent to the estimated tax shortfall—approximately Rs. 3.6 billion—whilst an expert committee, including representatives from the University of Moratuwa, was tasked with assessing the motor capacity of the vehicles.
The current detentions will also be subject to the outcome of the same committee’s findings. Until a decision is reached, the newly impounded vehicles may likewise be released only under a similar bank guarantee arrangement, potentially involving several billion rupees.
Before the controversy erupted, John Keells CG Auto Pvt. Ltd. had already imported and released over 2,500 BYD vehicles into the Sri Lankan market. Customs regulations currently stipulate that vehicle taxes be calculated based on motor capacity, and should the committee rule against the importer’s firmware-based justification, the bank guarantees may be forfeited and converted into tax payments to the state.
Industry experts warn that if this firmware-based argument is accepted, it may set a precedent allowing other importers to declare reduced engine capacities on similar software grounds. This could potentially lead to substantial tax revenue losses, estimated to be in the hundreds of billions of rupees, if broadly adopted across the electric vehicle import sector.
Related Stories:
https://lankanewsweb.net/archives/122233/committee-appointed-to-verify-byd-motor-capacity-amid-tax-evasion-allegations-unravels-billions-of-losses-to-sl/
https://lankanewsweb.net/archives/106581/byd-ev-import-scandal-sparks-tax-evasion-probe-buyers-in-limbo/
https://lankanewsweb.net/archives/103829/serious-allegations-surface-over-tax-manipulation-in-import-of-byd-brand-new-vehicles/
https://lankanewsweb.net/archives/104849/byd-evs-detained-over-motor-capacity-dispute-amid-revised-import-tax-rules/
https://lankanewsweb.net/archives/105222/software-tax-loophole-byd-atto-3-vehicles-held-at-hambantota-amid-allegations-of-tax-manipulation-via-motor-power-downgrades/
https://lankanewsweb.net/archives/105492/govt-orders-forensic-audit-on-byd-imports-amid-rising-controversy/
https://lankanewsweb.net/archives/106076/byd-tax-evasion-scandal-atto-3-not-the-only-model-subject-to-firmware-shift/
