Rs.100bn revenue leakage looms for motor industry, warns CMTA

SYSTEMIC UNDERVALUATION AND REGULATORY LOOPHOLES SET TO BLEED STATE COFFERS THIS YEAR CMTA PUSHES FOR SCRAPPING OF 15% DEPRECIATION CONCESSION ON USED VEHICLE IMPORTS SIX-PILLAR ROADMAP TARGETS SPARE PARTS SMUGGLING AND TECHNICAL TALENT DRAIN

- By NISHEL FERNANDO

Sri Lanka’s automotive industry could see government revenue leakages exceed Rs.100 billion by the end of this year, due to unchecked regulatory loopholes and systemic undervaluation, Ceylon Motor Traders Association (CMTA) Chairman Andrew Perera warned.

The projected leakage is a significant figure when set against the state’s wider fiscal position: it amounts to close to 2 percent of Rs.5.3 trillion in total government revenue budgeted for 2026 and to roughly a fifth of Rs.550 billion in vehicle import tax revenue the Parliamentary Committee on Public Finance has projected the sector will generate this year.

Addressing the association’s 106th Annual General Meeting in Colombo last Friday, Perera said the revenue leakage to the government amounted to Rs.40 billion in 2025 and that figure would rise to Rs.80 billion by the end of this year if the existing regulations, including the 15 percent depreciation concession offered to used vehicle importers, remained unchanged.

He said the Rs.80 billion projection captured only the leakage that could be reliably calculated from used vehicle import volumes and that the true figure was considerably higher, once the other malpractices were accounted for.