What is CIF in vehicle imports?
Cost, Insurance, Freight — the value of a vehicle when it arrives at the Sri Lankan port, before any local taxes are applied. CIF is the base on which all Sri Lanka import taxes (CID, surcharge, VAT, excise, luxury) are calculated.
Also known as: Cost Insurance Freight, CIF value, CIF price
What is CIF?
CIF stands for Cost, Insurance, Freight — the standard Incoterm used in international trade. For a vehicle imported to Sri Lanka from Japan, the CIF value is:
CIF = FOB price (vehicle cost in Japan) + insurance + ocean freight to Colombo or Hambantota
CIF is the foundation of the entire Sri Lanka import tax stack. Customs apply every other tax — Customs Import Duty (CID), the 50% surcharge on CID, VAT, excise and luxury tax — as a function of the declared CIF value.
For a Japanese-imported car, the CIF value is typically declared in JPY at the time of customs clearance and converted to LKR at the official exchange rate of the day. A simplified flow:
- FOB: the auction CIF or negotiated price in Japan, in JPY
- CIF: FOB + insurance (
1%) + ocean freight (¥80,000–150,000 depending on RoRo route) - CIF (LKR): CIF (JPY) × CBSL daily indicative rate
- Tax stack is then applied to the CIF (LKR) figure
Local yards in Sri Lanka frequently mark up the disclosed CIF before applying the tax math — this is the source of the 30–60% price-opacity gap that Car Dreams’ transparent landed-price math is designed to close. See our full pricing structure for the complete worked-example math.
Related terms
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FOB
Free On Board — the price of a vehicle at the port of export in Japan, before insurance and freight are added. FOB plus insurance plus freight equals CIF, the base on which Sri Lanka import taxes are calculated.
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CID (Customs Import Duty)
Customs Import Duty — the first line in Sri Lanka's vehicle import tax stack, set at 20% of the declared CIF value. CID is followed by a 50% surcharge (effectively 10% of CIF), then excise duty, then VAT, then luxury tax where applicable.
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Customs surcharge
A 50% surcharge applied on top of Customs Import Duty (CID) — effectively 10% of CIF — added to Sri Lanka's vehicle import tax stack effective February 2025. The surcharge is the second line in the tax cascade after CID and before excise duty.
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VAT
Value Added Tax — applied at 18% in Sri Lanka's vehicle import stack on the cumulative base of CIF×1.10 + CID + Surcharge + Excise + Luxury. VAT is the final tax line before business costs and is often the second-largest contributor to landed price after excise duty.
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Excise duty
A per-cubic-centimetre or per-kilowatt tax applied to motor vehicles imported into Sri Lanka, set by fuel type and engine band. Effective February 2025, excise rates range from LKR 1,000/cc for small petrol PHEVs to LKR 11,000/cc for large petrol engines, plus age surcharges for vehicles older than 3 years.
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