Sri Lanka Lifts Five-Year Vehicle Import Ban with New Restrictions

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By: Staff Writer

February 04, Colombo (LNW): After nearly five years of restrictions, the Sri Lankan Government has officially lifted the temporary suspension on vehicle imports, allowing cars, vans, buses, trishaws, bicycles, and other non-motorized vehicles to re-enter the market. 

The decision, announced under Gazette Extraordinary No. 2421/44, took effect on February 1, 2025, marking the third phase of easing import controls imposed since early 2020.

While this move is expected to stimulate economic activity and address pent-up demand, the Government has introduced nine stringent conditions to regulate imports, control foreign exchange outflows, and enhance State revenue.

New Conditions for Vehicle Imports

According to a statement from the Finance Ministry, the regulations aim to encourage economic revival while protecting foreign exchange reserves and preventing excessive vehicle imports. The key conditions include:

Registered Importers: Only importers registered with the Department of Motor Traffic and relevant State institutions are allowed to bring in the required number of vehicles under the new regulations.

Individual Import Limits: Any individual or entity, aside from registered importers, is restricted to importing only one vehicle within a 12-month period.

Mandatory Registration: All imported vehicles must be registered with the Department of Motor Traffic in the buyer’s or importer’s name within 90 days from the Customs Declaration (CUSDEC) date.

Affidavit Requirement: The importer or buyer must submit an affidavit, including their Taxpayer Identification Number (TIN), along with necessary documents to register the vehicle.

Import Declaration: Individuals importing a vehicle must declare in the affidavit that they have not imported another vehicle within the last 12 months.

Late Registration Fees: If a vehicle is not registered within 90 days, the importer must pay a late fee of 3% of the Cost-Insurance-Freight (CIF) value per month, up to a maximum of 45% of the CIF value. No exemptions will be granted.

Vehicle Age Calculation: The vehicle’s age will be determined by the period between its date of manufacture and the date of the Bill of Lading or Airway Bill.

 Import Permit Restrictions: Importation using permits issued with concessionary duty rates is not allowed.

Violation Penalties: Vehicles imported in violation of these rules must be re-exported within 90 days at the importer’s expense.

Increased Import Duties

Despite lifting the import ban, the Government has imposed steep duties to regulate vehicle inflow. Under Gazette No. 2421/05, issued on January 27, 2025, a 20% Customs Import Duty (CID) is applied to all vehicles classified under Chapter 87 of the HS Codes. 

Additionally, an Extraordinary Gazette (No. 2421/43), issued on January 31, 2025, enforces a 50% surcharge on the existing CID, effectively raising the total import duty to 30% of the CIF value from February 1, 2025.

These measures are designed to increase government revenue and curb excessive imports, preventing undue strain on the country’s foreign exchange reserves.

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