Sri Lanka on the brink of a vehicle price shock Further 2.5% tax to be imposed by April

• Customs to collect tax at time of vehicle release  
• Importers say move could significantly inflate landed costs

By Chaturanga Pradeep Samarawickrama  

The Vehicle Importers’ Association of Sri Lanka (VIASL) has issued a stark warning as vehicle prices are set to soar from April 1, 2026, following the government’s controversial adjustment to the Social Security Contribution Levy (SSCL) in the 2026 Budget.  

Under the new directive, 2.5% SSCL will now be collected directly at the port by Sri Lanka Customs at the time of vehicle release, affecting not just dealerships but individual buyers as well. Vehicles cleared before March 31 are exempt, but imports from April onward will face the additional levy. While officials insist that the SSCL is merely a “timing shift” rather than a new tax, importers warn that the move could significantly inflate landed costs, with some high-value vehicles seeing price jumps of hundreds of thousands of rupees.  

Speaking at a press briefing in Colombo yesterday, VIASL spokesperson Arosha Rodrigo said, “A 2.5% addition on a vehicle worth Rs. 10 million translates to Rs. 250,000. This is not insignificant for consumers. Prices are likely to rise sharply from April.”  

Dealers have expressed deep concern over the confusion and potential market risks posed by the new system. Uncertainty remains over whether VAT and luxury taxes will follow the same customs-based collection, or continue at the point of sale. According to VIASL President Madushan Mannapperuma, a rush of vehicle registrations occurred in January, as importers scrambled to beat the deadline, foreshadowing potential market chaos in the months ahead.  
 Compounding the situation, reports have surfaced of fraudulent practices involving temporary CC plates and fake tax clearance certificates, used by some companies to bypass regulations. VIASL stressed that stricter enforcement is urgently needed to prevent exploitation of loopholes.  

In conclusion, VIASL said it extended its appreciation to the Commissioner General of Inland Revenue Department for facilitating a comprehensive workshop that clarified key tax obligations within the motor vehicle import trade, particularly the computation of VAT at the sales point and related filing deadlines. The session addressed longstanding uncertainties among importers, paving the way for greater compliance and transparency. Moving forward, VIASL said it looked forward to continued collaboration with the Department through similar knowledge-sharing initiatives aimed at supporting the industry and strengthening regulatory alignment.