What is the luxury tax on imported vehicles in Sri Lanka?
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.
Also known as: vehicle luxury tax, luxury vehicle tax
What is the luxury tax on imported vehicles?
Sri Lanka’s vehicle luxury tax is a 100% tax on the portion of CIF that exceeds a fuel-specific threshold. It was introduced as part of the February 2025 import reopening and adjusted in April 2025 (Gazette 2434/04).
Thresholds (effective April 2025)
| Fuel | CIF threshold (LKR) |
|---|---|
| Petrol | 5,000,000 |
| Diesel | 5,000,000 |
| Petrol Hybrid | 5,500,000 |
| Diesel Hybrid | 5,500,000 |
| Petrol PHEV | 5,500,000 |
| Electric (EV) | 6,000,000 |
Worked example
A Toyota Vellfire (2.5 L petrol hybrid) with CIF LKR 9,030,000:
- Threshold (Petrol Hybrid): LKR 5,500,000
- CIF excess over threshold: LKR 9,030,000 − 5,500,000 = LKR 3,530,000
- Luxury tax: 100% of excess = LKR 3,530,000
That single line frequently dwarfs the other tax components on premium vehicles. A Land Cruiser or BMW 7 Series can attract LKR 10–20M in luxury tax alone, before excise and VAT compound on top.
Why it matters for buyers
The luxury threshold is the cleanest reason hybrids dominate Sri Lankan grey imports. The same physical car with a slightly lower CIF can cross from “no luxury tax” to “millions in luxury tax” in a single LKR step — and an honest importer will tell you exactly where the threshold falls for the spec you’re considering.
For full worked examples across petrol, hybrid and luxury bands, see pricing.md.
Related terms
-
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.
-
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.
-
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.
Have a Sri Lanka import term you want decoded?
bolt Average WhatsApp reply: 12 minutes (9am–7pm SLT).
Got it — message received.
We'll WhatsApp you the quote shortly. For urgent questions, you can also call us right now.
Couldn't send your message.
Please WhatsApp or call us directly — we'd love to help.