The government has extended the 50% surcharge on customs import duties applying to specified imported motor vehicles until December 31, 2026, the Finance Ministry said.

The extension takes effect on Friday, August 15 — the day the existing measure was due to lapse — and runs to the end of the year. It applies to both General and Preferential Customs Import Duty rates, according to Daily Mirror.

President Anura Kumara Dissanayake, in his capacity as Minister of Finance, Planning and Economic Development, issued the order on August 13. It was made under Section 10A of the Customs Ordinance (Chapter 235), which Ada Derana reported was amended by Act No. 83 of 1988.

Why it was introduced

The surcharge was first imposed in mid-May for an initial three-month period, as part of efforts to contain the foreign exchange Sri Lanka spends on vehicle imports, NewsFirst reported. The two outlets differ slightly on the start date: NewsFirst dates its entry into force to May 16, while Ada Derana says it was imposed from May 15.

Exemptions and conditions

Importers who established letters of credit on or before May 15, 2026 are exempted, subject to conditions.

That exemption is not unconditional. Daily Mirror reported that the 50% surcharge will still apply if key details of such a letter of credit are amended — including the number of vehicles, the vehicle identification number, the vehicle description, technical specifications or the expiry date.

The surcharge will also apply where the shipped-on-board date recorded on the Bill of Lading or Airway Bill falls after November 15, 2026, even if the letter of credit was established before the May cut-off.

Importers expect prices to rise

The Vehicle Importers Association of Sri Lanka (VIASL) said on Friday that the extension would push vehicle prices higher once newly imported stock reaches showrooms, Daily Mirror reported.

VIASL President Prasad Manage said vehicles currently on showroom floors were imported under letters of credit opened before May 15 and are not affected, but that stock arriving under later letters of credit will carry the surcharge.

“We expected the surcharge would not be extended, but due to various reasons it has been continued. As a result, we can expect further increases in vehicle prices,” Manage told reporters.

The association’s estimates of the likely increases run from about Rs. 500,000 for a Suzuki Wagon R and Rs. 1 million for a Toyota Raize to between Rs. 1.5 million and Rs. 2 million for a Honda Vezel. It expects a Toyota Prado to cost around Rs. 3 million more and a Land Cruiser about Rs. 5 million more, with double-cabs rising by roughly Rs. 2 million to Rs. 2.5 million.

These are the association’s projections, not government figures, and no official estimate of the price impact has been published.

Sources