Sri Lanka to End Duty-Free Vehicle Scheme, Cancel Existing Permits in 2027 Budget

Sri Lanka’s government has pledged to abolish the long-standing duty-free vehicle import scheme for public officials, with the cancellation of existing permits to be formalized in the 2027 Budget.

The commitment was outlined in the government’s Memorandum of Economic and Financial Policies (MEFP) attached to the IMF Country Report No. 26/111 (May 2026).

Under the Extended Fund Facility (EFF), the government confirmed that the suspension of duty-free permits was maintained on January 31, 2025, in line with its revenue-based fiscal consolidation objectives.

The MEFP states: “We are committed to canceling tax exemptions on motor vehicle imports for public officials. Going forward, we will maintain the suspension on the use of these permits, and we will review the mechanism to discontinue the scheme and cancel the existing permits (potentially costing 0.6 percent of GDP) in the 2027 Budget.”