If you’ve been tracking vehicle import costs in Sri Lanka, you already know 2025–2026 has been a rollercoaster. The Customs Import Duty (CID) on motor vehicles has gone through five major revisions in barely 16 months — surcharges introduced, removed, base rates hiked, and surcharges slapped back on again. Here’s exactly what happened, when it happened, and what it means for your wallet today.
The Five Stages of CID Changes (2025–2026)
Stage 1: The First Surcharge Arrives (February 2025)
On 31 January 2025, the government published Gazette No. 2421/43 under the Customs Ordinance (Chapter 235), imposing a 50% surcharge on the existing 20% CID. This was effective from 1 February 2025 and valid for one year.
- Base CID: 20%
- Surcharge: 50% of 20% = 10% of CIF
- Effective CID: 30% of CIF
This meant the CID component itself increased from 20% to an effective 30% of CIF value.
Stage 2: Surcharge Extended (February 2026)
Since Gazette 2421/43 was only valid for 12 months, the government issued Gazette No. 2473/31 on 31 January 2026, extending the surcharge from 1 February 2026 through 31 December 2026.
- No rate change
- Effective CID remained at 30% of CIF
Stage 3: Surcharge Folded into the CID (April 2026)
Gazette No. 2479/55 (dated 12 March 2026) rescinded the surcharge order of Gazette 2473/31 with effect from 1 April 2026. At the same time, the Customs Import Duty rates for these vehicles were raised by the same factor, so the old surcharge became part of the duty itself. The Sri Lanka Customs tariff schedule for Chapter 87 shows the change: for example, HS 8703.21.69 (small petrol cars) carries a general duty rate of 20% in the 2025 schedule and 30% in the 2026 schedule, and its preferential rate moved from 16% to 24%, the same 1.5 times.
- Base CID: 30% (was 20% + 50% surcharge)
- Surcharge: none
- Effective CID: still 30% of CIF
For importers nothing changed on 1 April: the CID was 30% of CIF before and after. It only looked like a removal because the surcharge line disappeared from the assessment.
Stage 4: Surcharge Returns Again (May 2026)
Then came Gazette No. 2488/56, reintroducing the 50% surcharge on the now-higher 30% base CID, effective 16 May 2026 for three months.
- Base CID: 30%
- Surcharge: 50% of 30% = 15% of CIF
- Effective CID: 45% of CIF
Critical exception: The surcharge does not apply if your Letter of Credit (L/C) was opened on or before 15 May 2026.
A follow-up order (Gazette No. 2488/69, dated 17 May 2026) narrowed that exception from 18 May 2026: if an L/C opened on or before 15 May 2026 is later amended to change the number of vehicles, a vehicle identification number, the description or the technical specifications, the surcharge applies.
Stage 5: Surcharge Extended to 31 December 2026 (August 2026)
Update, October 2026. The three-month period would have ended in mid-August, but Gazette No. 2501/88 (dated 13 August 2026) levied the 50% surcharge again from 15 August 2026 until 31 December 2026. L/Cs opened on or before 15 May 2026 remain exempt, except where the L/C is amended (number of vehicles, identification number, description, technical specifications or expiry date) or the shipped-on-board date on the Bill of Lading or Airway Bill is after 15 November 2026.
SSCL: The Additional Levy Nobody Saw Coming
On top of all the CID changes, the Social Security Contribution Levy (SSCL) became applicable on imports from 1 May 2026 at a rate of 2.5%. It shares the same tax base as VAT:
SSCL Base = (CIF × 1.10) + Total CID + Excise Duty
SSCL = SSCL Base × 2.5%
This adds yet another layer to the cascading tax structure.
Real-World Impact: Honda Vezel 2024 Hybrid Import (Before vs. After)
To show exactly how these changes hit your pocket, here’s a side-by-side comparison using a 2024 Honda Vezel Petrol Hybrid (1496cc) — one of the most popular imports in Sri Lanka right now.
Vehicle Details
| Component | Amount |
|---|---|
| Vehicle Cost (FOB) | ¥3,320,000 |
| Freight & Insurance | ¥280,000 |
| Total CIF (JPY) | ¥3,600,000 |
| Exchange Rate | Rs. 2.03/JPY |
| CIF Value (LKR) | Rs. 7,308,000 |
CID Comparison
| Description | Before May 2026 | After 16 May 2026 |
|---|---|---|
| Base CID Rate | 20% | 30% |
| Surcharge | 50% (of CID) | 50% (of CID) |
| Effective CID Rate | 30% | 45% |
| CID Amount | Rs. 1,461,600 | Rs. 2,192,400 |
| Surcharge Amount | Rs. 730,800 | Rs. 1,096,200 |
| Total CID + Surcharge | Rs. 2,192,400 | Rs. 3,288,600 |
The “before” column shows the structure from February 2025 to March 2026. From 1 April to 15 May 2026 the same Rs. 2,192,400 was charged as a single 30% CID with no surcharge. The CID component alone increased by Rs. 1,096,200 from 16 May 2026.
Excise Duty
| Component | Before | After |
|---|---|---|
| Excise Duty (1496cc × Rs. 3,450/cc) | Rs. 5,161,200 | Rs. 5,161,200 |
(Excise rates unchanged — based on CC and HS Code)
Luxury Tax
| Description | Before | After |
|---|---|---|
| Threshold (Petrol Hybrid) | Rs. 5,500,000 | Rs. 5,500,000 |
| Taxable Excess | Rs. 1,808,000 | Rs. 1,808,000 |
| LXT @ 80% | Rs. 1,446,400 | Rs. 1,446,400 |
(Luxury Tax unchanged — CIF value and thresholds remain the same)
VAT Calculation
Since VAT is calculated on a base that includes CID, the higher CID pushes the VAT amount up — even though the VAT rate itself (18%) hasn’t changed.
| Description | Before | After |
|---|---|---|
| VAT Base (CIF×1.10 + Total CID + XID) | Rs. 15,392,400 | Rs. 16,488,600 |
| VAT @ 18% | Rs. 2,770,632 | Rs. 2,967,948 |
VAT increased by approximately Rs. 197,316 — not because VAT changed, but because the CID increase inflated the VAT base.
SSCL
This is an entirely new levy (2.5%) that didn’t exist before May 2026.
| Description | Before | After |
|---|---|---|
| SSCL Base (same as VAT base) | — | Rs. 16,488,600 |
| SSCL @ 2.5% | Not applicable | Rs. 412,215 |
Other Charges
| Component | Before | After |
|---|---|---|
| Vehicle Entitlement Levy (VEL) | Rs. 15,000 | Rs. 15,000 |
| COM / EXM / SEL | Rs. 1,750 | Rs. 1,750 |
Update: from 1 July 2026 the COM / EXM / SEL charge is Rs. 4,000 (revised Customs fees, Gazette No. 2493/02), which adds Rs. 2,250 to the landed costs in this May 2026 comparison.
Final Landed Cost (Government Taxes Only)
| Description | Before May 2026 | After 16 May 2026 | Difference |
|---|---|---|---|
| CIF Value | Rs. 7,308,000 | Rs. 7,308,000 | — |
| Total CID + Surcharge | Rs. 2,192,400 | Rs. 3,288,600 | +Rs. 1,096,200 |
| Excise Duty | Rs. 5,161,200 | Rs. 5,161,200 | — |
| Luxury Tax | Rs. 1,446,400 | Rs. 1,446,400 | — |
| VAT | Rs. 2,770,632 | Rs. 2,967,948 | +Rs. 197,316 |
| SSCL | — | Rs. 412,215 | +Rs. 412,215 |
| VEL + COM | Rs. 16,750 | Rs. 16,750 | — |
| Total Landed Cost | Rs. 18,895,382 | Rs. 20,601,113 | +Rs. 1,705,731 |
The same Honda Vezel now costs approximately Rs. 17 lakhs more — driven primarily by the CID increase (Rs. 1,096,200), the new SSCL (Rs. 412,215), and the cascading VAT increase (Rs. 197,316).
Note: This excludes bank charges, clearing fees, and commissions which would add another Rs. 300,000–700,000 to the final price.
Why the Total Cost Increase Is Larger Than Just the CID Hike
Sri Lanka’s import tax system is cascading — certain taxes are calculated on a base that includes previously applied taxes:
- CID is calculated directly on CIF value
- Surcharge is calculated on CID amount
- VAT is calculated on (CIF × 1.10 + Total CID + Excise Duty)
- SSCL uses the same base as VAT
- Luxury Tax is on CIF excess above threshold (not affected by CID changes)
So when CID rises from 30% to 45% of CIF, it doesn’t just increase the CID line item — it also inflates the base on which VAT and SSCL are calculated. For this Honda Vezel, the Rs. 17 lakh total increase breaks down as:
- CID + Surcharge increase: Rs. 1,096,200 (the direct CID hike)
- SSCL (new tax): Rs. 412,215
- VAT increase (cascading effect): Rs. 197,316
Excise Duty, Luxury Tax, VEL, and other charges remain unchanged. The entire increase comes from the CID structure change and the new SSCL.
What This Means for You Right Now
If you’re planning to import:
- The 45% effective CID applies to imports from 16 May 2026 (unless your L/C qualifies for the exemption below)
- The surcharge was extended by Gazette 2501/88 until 31 December 2026; watch for another gazette before then
- SSCL at 2.5% is here to stay and adds to every import regardless of timing
If you opened your L/C on or before 15 May 2026:
- You’re exempt from the 50% surcharge (Gazettes 2488/56 and 2501/88), as long as the L/C is not amended and the vehicle is shipped on board by 15 November 2026
- Your effective CID remains at 30%
- SSCL still applies if your goods are cleared after 1 May 2026
If you’re buying locally:
- Expect used-car prices to rise as new import costs filter through the market
- Vehicles imported before May 2026 may command a premium
- Consider acting sooner rather than later if you find a fairly priced vehicle
Exchange Rate Warning
All figures above use a constant exchange rate for clean comparison. In reality, the Sri Lankan Rupee has been fluctuating, which means actual landed costs could be higher than shown. Always use the current exchange rate when running your own calculations.
Quick Reference: Complete Gazette Timeline
| # | Gazette | Date | Change | Effective Duty |
|---|---|---|---|---|
| 1 | 2421/43 | 31.01.2025 | 50% surcharge introduced | 30% |
| 2 | 2473/31 | 31.01.2026 | Surcharge extended | 30% |
| 3 | 2479/55 | 01.04.2026 | Surcharge order rescinded; CID rates raised from 20% to 30% (surcharge folded into the duty) | 30% |
| 4 | 2488/56 | 16.05.2026 | 50% surcharge reintroduced (3 months) | 45% |
| — | 2488/69 | 18.05.2026 | Amended L/Cs lose the exemption | 45% |
| 5 | 2501/88 | 15.08.2026 | 50% surcharge extended to 31.12.2026 | 45% |
Sources: Orders under Section 10A of the Customs Ordinance (Gazettes 2421/43, 2479/55, 2488/56, 2488/69 and 2501/88) on the Ministry of Finance gazette list; Sri Lanka Customs National Imports Tariff Guide, Chapter 87, 2025 edition and 2026 edition.
Calculate Your Own Vehicle’s Cost
Want to know exactly what your specific vehicle will cost under the new rates? Use our Vehicle Import Tax Calculator — it’s already updated with the latest 30% CID, 50% surcharge, SSCL, and all current gazette rates.
The Honda Vezel example above went from Rs. 18.9 million to Rs. 20.6 million. Your vehicle’s increase will vary based on engine capacity, fuel type, and CIF value — but the direction is clear. Run the numbers yourself and plan accordingly.