Fraudulent vehicle imports incur loss of Rs. 3 bn in tax revenue
A high-profile fraud involving over 200 luxury vehicle imports has been unearthed, amounting to a colossal loss to the government owing to non-payment of tax.
The vehicles imported after 2015 were illegally registered in Sri Lanka’s Motor Traffic Department-MTD database as being imported before 2005 for evasion of paying customs duties,
The Commission to Investigate Allegations of Bribery or Corruption (CIABOC) launched an investigation after it was tipped off that 400 vehicles had been registered without paying the requisite custom duties.
It was revealed that the aforementioned vehicles were fraudulently included in the MTD database, evading the declaration system maintained by Sri Lanka Customs, in contravention of the Customs Ordinance.
As of April 2024, the CIABOC intelligence unit uncovered details of 200 such vehicles, with customs clearance records missing for 51.
These included high-end models such as Jeeps, Land Cruisers, Monteros, and luxury cabs. The estimated loss to the government is Rs.3 billion in unpaid duties, internal audit inspection carried out by the national audit office unit at Customs Department revealed.
On April 5, 2024, Colombo Chief Magistrate Prasanna de Alwis issued an interim order suspending the change of ownership of the 51 vehicles.
The CIABOC has filed a case based on these allegations at the Colombo Chief Magistrate’s Court last Tuesday.
Colombo Chief Magistrate Thilina Gamage issued summons to six high-ranking officials including a Deputy Commissioner of Motor Traffic Department, a software developer, and four clerks who maintain records pertaining to vehicle registration of the MTD and two vehicle importers to appear in Court, in connection with their alleged involvement in this vehicle registration scam.
The Court also issued an order to seize 20 vehicles that were in their possession; they were handed over to customs for further investigations.
This fraud goes back to a time when there were imports of vehicles prior to Sri Lanka imposing the ban in 2021, due to the economic crisis situation.
However, there are concerns about systemic vulnerability with regard to customs and registration processes following the latest announcement to lift restrictions on imports from February 2025.
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