Sri Lanka Imposes 50% Surcharge on Imported Vehicles for Three Months

Reports suggest the 50% surcharge on imported vehicles may be extended beyond the initial three-month period due to pressure on the Rupee and the prevailing economic situation. Financial institutions have reportedly decided to reduce loan-to-value (LTV) ratios for vehicle financing, offering up to 70% for commercial vehicles and 50% for private vehicles. The Central Bank of Sri Lanka (CBSL) has also indicated that vehicle prices could see a temporary increase due to the surcharges and exchange rate fluctuations. The Vehicle Importers Association of Sri Lanka (VIASL) has urged authorities to provide relief for vehicles already imported or for which Letters of Credit (LCs) have been opened.

Further details have emerged regarding the 50% surcharge on imported vehicles. Cabinet has approved the submission of orders relating to the temporary surcharge to Parliament. In an unexpected turn, the market reaction has been contrary to the government's expectations, with reports indicating that banks are opening more Letters of Credit (LCs) for vehicle imports, leading to a doubling or tripling of dollar demand.

New reports clarify that the Middle East conflict has led to significantly increased import costs, prompting the government to implement the surcharge to mitigate its negative impact on the national economy. The regulations were issued via special gazette notification number 2488/56 dated May 15, 2026. Additionally, Cabinet has approved presenting these surcharge regulations to Parliament.