Duty-Free Permits system under scrutiny
Sri Lanka’s duty-free vehicle permit system, originally intended to reward long-serving public servants and reduce the cost of official mobility, has been mired in controversy due to issuance of permits during the vehicle import ban period.
The granting of car permits to Sri Lankan government officials continues unchecked in spite of the import ban, creating a situation where several officials have permits but are unable to use them to import cars. This has raised calls of urgency and explanation from the government on how to utilise these permits.
The government’s focus on foreign exchange reserves and potential revenue generation from vehicle imports also plays a role in the ongoing discussion.
Some 25,508 duty-free vehicle permits had been issued to public servants since 2020, despite the country’s vehicle import ban, a official of the Finance Ministry confirmed. The permits offering a tax concession, with most allowing a duty concession up to Rs. 3.6 million, were distributed following the suspension of vehicle imports aimed at easing pressure on foreign reserves.
However, no final decision has been made to allow the importation of vehicles under these permits, and the process remains temporarily suspended, he disclosed.
According to ministry records, only 2,043 permits have been issued so far in 2025, but a significant number were distributed in previous years — 6,062 in 2024, 5,718 in 2023, 3,340 in 2022, 2,972 in 2021, 5373 in 2020, ministry data showed.
Several public interest activists alleged that the system has evolved into a privilege loop for parliamentarians and high-ranking officials, many of whom are accused of selling or transferring these permits to third parties, defeating the purpose entirely.
The system’s lack of transparency and accountability has long raised red flags. While the government faces a severe foreign exchange crisis, issuing permits that potentially trigger foreign outflows when imports resume reflects poor fiscal discipline.
It has been revealed that even after the vehicle import ban, many permits were allegedly sold or transferred for profit, undermining the system’s original purpose of providing incentives for public service, reduced state costs on official transport, and retention of skilled personnel.
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