Sri Lanka customs detains nearly 1 000 Chinese EVs over excise tax dispute

Colombo, Jul 30 (PTI) Nearly 1,000 electric vehicles (EVs) from Chinese manufacturer BYD are being held at Sri Lanka Customs over suspected undervaluation of motor power to reduce excise duty, officials told the parliamentary oversight committee on Wednesday.
     The vehicles, imported by John Keells Group, the official BYD agent in Sri Lanka, are under investigation for allegedly declaring motor power as 100 kilowatts (kW), whereas the actual power output is reportedly 150 kW.
     The misdeclaration could result in a significant tax difference — 1.4 million Sri Lankan rupees in duty for 100 kW versus 5.4 million Sri Lankan rupees for 150 kW.
     Speaking before the Committee on Public Accounts (COPA), its chairman Harsha de Silva called for independent verification by an internationally accredited agency.
     “This is an issue between two countries”, de Silva said and referenced a 2022 dispute in which China rejected Sri Lanka's quality testing of what it alleged was a contaminated fertiliser shipment and secured a favourable report from Singapore, forcing Colombo to pay compensation.
     Customs officials, who had detained the consignment on July 28, attributed delays in the investigation to a lack of support from the John Keells group.
     In a statement, John Keells Group denied any deliberate misleading of Sri Lanka Customs to lower the excise tax. “The motor power of these vehicles has been verified through test reports issued by BYD in China and further certified by an independent testing body”, the company clarified.
     The issue comes amid a surge in EV imports after Sri Lanka lifted a five-year ban in February 2025 due to the Covid pandemic, and Sri Lanka’s economic crisis on vehicle imports.
     BYD quickly emerged as a dominant player, capturing nearly 90 per cent of the EV market and over 10 per cent of overall car sales by May, according to industry estimates.

(This story has not been edited by THE WEEK and is auto-generated from PTI)