| Year | Number of individuals granted | CIF value (LKR) | Applicable Luxury tax (LKR) | Exemption (LKR) |
|---|---|---|---|---|
| 2019 | 2,034 | 15,438,165,476 | 8,386,568,292 | 8,386,568,292 |
| 2020 | 1,470 | 10,949,550,670 | 5,952,819,964 | 5,952,819,964 |
| 2021 | 3 | 102,428,935 | 85,687,264 | 85,687,264 |
| Total | 3,507 | 26,490,145,081 | 14,425,075,520 | 14,425,075,520 |
| 2023 | 138 | 2,644,918,039 | 1,090,150,823 | 436,560,827 |
| Total | 138 | 2,644,918,039 | 1,090,150,823 | 436,560,827 |
| Grand Total | 3,645 | 29,135,063,120 | 15,515,226,343 | 14,861,636,347 |
Colombo, Sri Lanka – The Sri Lankan government has experienced a substantial revenue loss due to luxury tax exemptions and concessions granted in recent years. According to data as of December 31, 2023, these tax policies have resulted in a total revenue loss of LKR 14,861,636,347, with thousands of individuals benefiting from these exemptions.
Overview of Beneficiaries
Between 2019 and 2023, a total of 3,645 individuals were granted luxury tax exemptions and concessions. The breakdown of beneficiaries is as follows:
- 2019: 2,034 individuals
- 2020: 1,470 individuals
- 2021: 3 individuals
- 2023: 138 individuals under the migrant workers’ remittance scheme
This number represents tax exemptions only for the individuals who were granted permits for importing luxury vehicles under the tax benefits. The total number of beneficiaries of permits for duty-free vehicles is yet to be revealed.
Financial Impact
The exemptions have had a notable financial impact on the nation’s economy. The total CIF (Cost, Insurance, and Freight) value of the imported vehicles amounted to LKR 29,135,063,120. This figure translates to approximately USD 91,046,447, assuming an average exchange rate of 1 USD = 320 LKR. This substantial outflow of funds highlights the significant economic consequences of the tax exemptions.
Revenue Loss Breakdown
The revenue loss due to luxury tax exemptions is distributed over several years:
- 2019: LKR 8,386,568,292
- 2020: LKR 5,952,819,964
- 2021: LKR 85,687,264
- 2023: LKR 436,560,827 (under the migrant workers’ remittance scheme)
The cumulative revenue loss underscores the need for a careful review and potential revision of luxury tax policies to mitigate further economic impact.
