Sri Lanka Customs has detained nearly 1,000 Chinese-made BYD electric vehicles after discovering discrepancies in the declared motor capacities used for tax calculation — a move that could expose a multimillion-rupee tax shortfall and spark a major import scandal.
The issue revolves around six consignments of BYD EVs that arrived in Sri Lanka earlier this month. While the official documentation states the motor capacity as 100 kilowatts (kW), authorities suspect many of the vehicles are actually equipped with 150kW motors — a significant difference that directly impacts the import duty, potentially leading to tax evasion of up to Rs. 3 million per vehicle.
A 100kW EV is taxed at Rs. 2.4 million, whereas a 150kW version is charged Rs. 5.4 million. If these cars were indeed under-declared, both importers and unsuspecting consumers could be looking at financial liabilities running into billions of rupees.
The controversy grows deeper as over 1,000 vehicles have already been released to end users, raising concerns over enforcement, accountability, and potential legal fallout for both importers and buyers.
Officials say the problem lies in Sri Lanka’s outdated and ambiguous tax regulations, which fail to address variations in electric motor outputs. In the EV world, the same model can come with multiple motor configurations — something common in international markets like Singapore and Nepal, where BYD’s Atto 3 is sold in both 100kW and 150kW variants.
“This is not just a Customs issue — it’s a policy failure,” one official said. “We don’t have clear guidelines on how to treat derated motors or whether to tax based on performance or physical capacity.”
The lack of clarity has left importers in a bind and could burden end users with unexpected taxes. The parliamentary Public Finance Committee has previously flagged this loophole, warning that without urgent reform, such incidents will continue to harm both revenue collection and consumer trust.
A spokesperson for JKCG Auto, the local agent for BYD, confirmed that the brand offers different performance levels globally and insists that the models imported comply with the specifications offered in similar markets.
With calls growing for an immediate policy overhaul, Customs is expected to issue further guidance in the coming weeks. Meanwhile, stakeholders are urging the government to establish transparent, consistent criteria for EV imports before the sector grinds to a halt under regulatory uncertainty.
