Sri Lanka to implement contingency measures for high vehicle tax: IMF

• CNL Reporter
• July 10, 2025
• Political
• Vehicle Tax
• 0 Comments

Sri Lanka is committed appropriate contingency measures for vehicle import tax, which is the main source to boost its revenue collection this year, the International Monetary Fund (IMF) said in its latest report.

“The significant dependence of revenue gains on motor vehicle import taxes necessitates strong contingency planning,” the IMF said its report following the approval of Sri Lanka’s fourth review of its $3 billion bailout package.

It said high-frequency data suggest a steady growth in motor vehicle imports after the removal of import restrictions on February 1, with around $675 million in letters of credit opened and corresponding tax collection at 0.5 percent of GDP by June 10.

“Given the reliance of 2025 revenue gains (around 80 percent) on this single measure, the authorities are committed to implementing appropriate contingency measures to protect medium-term revenue if signs of underperformance emerge.”

Analysts say the island nation will not see the same pent up demand for vehicles in the next few years due to higher taxes