What is excise duty on imported vehicles in Sri Lanka?
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.
Also known as: excise tax, vehicle excise, special excise duty
What is excise duty on imported vehicles?
Excise duty is the largest tax line in most Sri Lanka motor car imports — frequently larger than CIF itself for high-engine-displacement vehicles. It’s calculated per cubic centimetre of engine displacement (or per motor kilowatt for EVs), with rates set by fuel category in Sri Lanka Gazette 2421/41 (effective February 2025).
Excise rates by fuel and engine band
| Fuel | Engine band | Excise (LKR / cc) |
|---|---|---|
| Petrol | up to 1,000 cc | 1,200 |
| Petrol | 1,001–1,500 cc | 1,750 – 2,750 |
| Petrol | 1,501–2,000 cc | 3,750 – 6,000 |
| Petrol | 2,001–3,000 cc | 8,000 – 9,500 |
| Petrol | over 3,000 cc | 11,000 |
| Diesel | up to 1,500 cc | 3,500 |
| Diesel | 1,501–2,000 cc | 5,500 |
| Diesel | over 2,000 cc | 9,500 |
| Petrol Hybrid | up to 1,500 cc | 1,500 |
| Petrol Hybrid | 1,501–2,000 cc | 3,000 |
| Petrol Hybrid | over 2,000 cc | 6,000 |
| PHEV | up to 1,500 cc | 1,000 |
| PHEV | 1,501–2,000 cc | 2,000 |
| EV | per motor kW | 12,000 |
Worked example
A 2020 Toyota Aqua (1,500 cc petrol hybrid):
- Engine: 1,500 cc
- Rate: LKR 1,500/cc
- Excise: 1,500 × 1,500 = LKR 2,250,000
Vehicles older than 3 years pay an additional age surcharge of typically 10–15% on the excise figure.
Why it matters
Excise rates are why hybrids and PHEVs cost so much less to land in Sri Lanka than equivalent-engine petrol or diesel cars. A 1,500 cc petrol pays 2,750/cc; the same engine in hybrid form pays 1,500/cc — a 45% reduction on the largest tax line. This is the primary tax-policy driver behind Sri Lanka’s overwhelming hybrid-import preference.
The full tax stack — including how excise interacts with CID, surcharge, VAT and luxury tax — is documented in pricing.md.
Related terms
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CIF
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.
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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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Luxury tax
A 100% tax applied to the portion of CIF exceeding fuel-specific thresholds. Effective April 2025 (Gazette 2434/04), the threshold is LKR 5M for petrol and diesel, LKR 5.5M for hybrids and PHEVs, and LKR 6M for EVs. Luxury tax is the single largest line on premium vehicles like the Vellfire, Land Cruiser and BMW 7 Series.
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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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