Fuel-Powered EVs to Face New Tax Bracket

COLOMBO (News 1st); Sri Lanka is set to introduce a new excise duty category for electric vehicles that operate using fuel-powered motors. The proposed regulations were tabled in Parliament today (21) for approval.

Deputy Minister of Labour and Economic Development, Dr. Anil Jayantha, explained that vehicles without proper classification currently fall under a general category, which results in disproportionately high taxes. To address this, the Cabinet approved the formation of a committee to develop a new classification system using updated HS codes.

The new category will apply to vehicles that are neither fully electric nor fully hybrid, but fall in between. Special excise duties will be imposed under this classification, with tax rates adjusted based on the vehicle’s level of luxury and affordability.

Dr. Jayantha emphasized that the new system is designed to:

- Reduce tax burdens for lower-cost vehicles
- Impose higher taxes on luxury models
- Ensure fair and practical categorization for modern vehicle types