A brief guide on importing a car to Sri Lanka

Seems this topic has suddenly become a popular forum discussion point, and decided to give some personal experiences. Please note these are experiences I faced, or my friends phased during the period Aug – Nov 2010, and things may have changed if you are reading it later.  Do not take this contents are pure standard, and check with the documents and authorities as things change, use this just as good reading!

A work in progress as I fill in the details (some I have just left xxx to get the precise name as it alludes me right now).

The basic steps are pretty simple,

  1. You find a dealer in Japan who can buy the car for you and ship it, or find a dealer locally who has contacts in Japan who can buy the car for you at an auction.
  2. The dealers quote two prices
    1. FOB price which is the auction price, Japanese taxes and any local transportation.
    2. CIF price, the dealer will then add his markup (profit), the cost of JAAI (or equivalent certification) and the shipping and insurance costs.
  3. The dealer will then ask you to raise a LC with the bank for the CIF value.
    1. The banks will lock 10% more than the CIF value to cover any changes in currency rates.  So make sure you have 10% more than the CIF value in your bank to raise the LC.
    2. The bank will lock the value using the current exchange rate, but this is not your final cost.  The actual amount will be based on the currency rate on the day you get the papers from the dealer just a few days back.
    3. Another thing important is that you make sure the invoice sent by the dealer for you raise the LC has your name spelt correctly as in your tax file / identity card, and the address is the same.  If not you are going to have a big problem when clearing the car.
  4. Once the LC has been raised the dealer in japan will start the shipping process, and will inform you a tentative date that the ship will leave the country.
    1. The month (And in some cases the date) the ship leaves the country is important, as the tax bracket the vehicle will fall under is decided this milestone.  So work that calculations carefully and make sure the car is not over 3.5 years older as such vehicles are not allowed (usually the dealers know this and will advise you)
    2. You then test your patience, as the likely hood of the estimated shipping time and actual may vary not due to the ship getting late, but the dealers have a history of telling you a date, and actually shipping it later as they try increase their profits by bulk shipping.  You may ask why is he not giving me the benefit of the shipping savings, since you will notice it in the invoice.  But the standard policy is that they quote a value less than the actual to ensure you taxation locally remains below the agent market value.
  5. A few days before the ship comes into Sri Lankan ports, the dealer will send your papers to the bank. The bank will then call you and inform about the receipt of the document, and the moment you sign and confirm on the papers at the bank is when you are actually charged for the LC value and any excess from the 10% the bank retained over the standard value is released back into your account.
  6. Once you have the documents you can then start the customs clearance process.  You will first need to either visit the Inland Revenue to get the TIN/VAT documents, or have an agent who handles tax work help you out.  Using an agent is the best approach as they seem to be able to get the documents within a day.  In case you don’t have a tax file, a new tax file is created for you 🙂
  7. You will also have to get the XXX document.  Some clearance agents won’t get you this and you then need to go and get this.  However most good clearance agents will do this and save you the trouble.
  8. Once you have the TIN/VAT documents, you then need to contact your clearance agent before you go and handover the documents to the customs (you need to do this personally or provide a letter that the person is handing on your behalf).  The queue is minimal and you should be done with the handing over in less than 15mins at MOST!
  9. The clearance agent will then start the clearance process and inform you of the total tax and accessories price you need to raise the PO from a bank.  You then hand over the PO to the clearance agent to complete the clearance.
  10. The clearance agent will clear the vehicle and inform you, or tell you to be there at the customs gate to pick the car.

Some questions and watch outs

Direct Japanese dealer or Local dealer who works with a Japanese dealer

The best option it seems is to go with a local dealer who has his own company in Japan or a contact that he works in partnership. This way you don’t end up paying a markup for the local dealer.

If you go with a local dealer who has connections in Japan, he will also only charge a down payment for you until the vehicle is purchased in the auction, and once you raise the LC will refund you the down payment.

Can I trust the amount the Japanese dealer quotes

Well this is a tough one.  Dealer in the early days seems to have been a lot more customer oriented, but seems the approach now is you tell me the figure you want to spend and will try to get you a vehicle or tell you how much more you need spend (never how much less).

The reason being that the dealer will not share the auction numbers, unless you have some way of connecting to the auction system and checking the auction sale price.  However note the auction sale price is not the FOB price, as there are some taxes the dealers have to pay and some auction surcharges.

How much is the general charge on top of FOB prices

The charge is based on the markup by the dealer, and the shipping and insurance charges.  Again dealers seem to have been a lot more customer oriented before and the charges were around 220,000 YEN in total for small cars (Vitz, Fit, etc) and 300,000 YEN for medium size cars (Civic, Corolla, RAV4), etc.  Larger cars sadly I have no values.  However in recent times this value seems to have increased to 350-400,000 YEN, and even small cars are charged 300,000 YEN.

What does the clearance guy do for the money he charges

Some will get the XXX document for you, you need to pay the cash for this

  • They will get the market value approved by the local agent
  • They will clear the vehicle for you, and based on how “connected” they are decides how quickly you get your car out
  • The “connected” feature will also help in the areas of accessories, since there is some grayness in the accessory charges, and you can end up with premium taxes.  So the clearance guy can help you here to ensure you don’t get ripped out.

How much can you trust the clearance guy

Clearance guys test your knowledge and can sucker you.  One famous cheat is to say that they can save you from some accessory charges as they have contacts in customs, and show the tax amount, and tell you how much you need to bribe the customs.  Seems in many cases there is no such accessory charge, and the “Bribe” is actually cash they pocket. How can you track this,

The only legitimate cash being paid is the PO you raise for the payment.  This includes the charges + accessories.  Anything you pay as cash is something you are paying to the clearance guy or a bribe payment
Find a contact in the local agent to see what are the standard features for your car, and see if these are being mentioned as accessories by your clearance guy.  E.g. Alloys are standard for most Honda cars, but not for Toyota.  However the clearance guy will see if you are aware of this, if not say the alloys are optional and that you have to pay taxes, and he can save you 50% of it by bribing

However seems that as everything goes the ability to penetrate the customs officers is still possible and influential clearance chaps seem to be able to pull out major savings.  No I sadly don’t know such a clearance guy, so please don’t contact me or post any such entries into this forum!

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41 thoughts on “A brief guide on importing a car to Sri Lanka”

  1. Sir i want to import my car from india to sri lanka on my wife’s name as she is a Sri lanka citizen but i m holding just visitor visa……is it possible?? and whom to contact for this? and how much will be the custom duty and how old could be the vehicle to be importable?

    1. Based on my knowledge expats are not allowed to import vehicles. I have heard that you can bring your vehicle and use it for 1 year without any registration, but you need to pay a special tax to bring the vehicle in. For which countries vehicles are allowed, i am not certain.

    1. Dear rayaz

      Im study in foreign country i want to send the second hand vehical to sri lanka. Then i have to do custom clearance part only?
      Cant i send the old vehical more than 5year use.
      Pleas be kind enough to reply me.

      Priyanka

  2. Dear Rayaz,

    soon I am going to become a dual citizen of both UK and Sri Lanka. I want to export a car from UK to Sri Lanka for my personal use. I have tried to find information on how to do this on line and there is no info on line. Could you please kindly enlighten me about the process ?

    Thanks bro

    salaam

  3. Dear rayaz, Are their any limit in number of vehicles that can be personally imported? if someone personally imports one vehicle at a time for re-selling purpose, (without registered company) is it the same procedure or are there any different procedure and additonal documents?. Please kindly reply me

  4. Dear rayaz, Are their any limit in number of vehicles that can be personally imported? if someone personally imports one vehicle at a time for re-selling purpose, (without registered company) is it the same procedure or are there any different procedure and additonal documents?.

  5. Dear rayazmuthalif
    This valuable post.i would like to know more details about the vehicles which are permitted to import to srilanka and age categories also taxes which are applicable on importing a vehiclef .if you can contact through my mail

  6. Great work , thank you very much, as per your knowledge please advise me, my budget is 40 lack , Toyota which model will be good,

  7. Can you please give me your contact number, even through this blog is informative, I would prefer speaking to you to get a better knowledge.

    Thanks so much

  8. for a Toyota Aqua 2012 or 13,how much approximately i would be saving if i buy it from a japan auction instead of srilankan local dealer, is it wort to take such a risk, appreciator any suggestion on this

    1. You need to first check with the Japanese auction contact what is the full cost in addition to the vehicle price that they charge. Then work the local import tax and clearance (a friend of mine says the cost is around 45K now for clearing, getting the TIN, etc). If the auction chap gives you access to the auction site to select which vehicles you want them to bid, then you know what you are getting, if not its better you get it from here. You will also need to beef up your knowledge to read an auction report, though understanding what options are in the car, is hard since the report is in Japanese!

      Local vendors here in most cases may not show you the auction report for used vehicles, and in some even fake the reports as they may have repaired the car of any damages. However if the car is zero mileage (aka new) then this may not be a concern.

      Also make sure you are fine with the vehicle color, alloys etc buy visiting local car sales and checking a similar car, as the brochures and online pictures and the real colors of the car differ immensely.

      1. Dear Mr; Rayaz,
        Very valuable details.thanks a lot for your information.Please let me know what is the latest custom duties for hybrid & KDH van..

        regards

        Denzil

  9. It is hard to find this kind of blogs. thank you very much for sharing your actual experiences, but that,s what people do not use to. Great stuff.

    BR,
    rohana

  10. I was really happy to read this post. Appreciate very much your largeheartedness in sharing your experience with everyone.

  11. Thank you so much for the valuable information posted. If I import a car which manufacture year is belongs 2008, let me know any of you the payable tax portion.

  12. I’ve been surfing on-line greater than three hours lately, yet I by no means found any fascinating article like yours. It is beautiful worth sufficient for me. In my opinion, if all website owners and bloggers made just right content as you did, the web might be much more helpful than ever before.

  13. Apologies for posting part comment concerning “Clearance”, did read your instructions late, I was born in Sri Lanka, holding expat status – was not stated in my query. Thank you.

  14. Thank you for this information provided by you. I have been in contact with almost all the authorities in Colombo, maybe you can advice me:-
    Am holding a foreign nationality and want to import one new automobile into Sri Lanka, do I need an Import License ? one consultant says YES, the others says I need to register an Company in Sri Lanka, The Embassy of Sri Lanka cannot give me the right Information sadly.
    Is there any help available on this topic, automobile to be imported has a engine classification of above 3000 cc and the duty rating is 180.6% on the CIF value.
    Are there any recommended clearing agents ?

  15. thank you very much for making us know about these things.
    And could you please tell me what you meant by LC , TIN , PO above and also how they charge the taxes or VAT for the car ; i meant, do they charge taxes or VAT on FBO price or CIF price or some thing ells……

  16. Many thanks for this valuable guide.

    I have one more problem to clear is that who will give us the FOB valu of the vehicle?

    Does they use the FOB value given by Japanese used car seller when calculating the duty in Sri Lankan custom in the following formula?

    Duty in SLR = [(FOB Value in JPY) + (Other in JPY)] * Yen rate * (Lap Percentage) * (Tax Percentage)

    Do we need to get FOB value from Sri Lankan dealer.

    If someone know about how to get FOB value, please post it here….

    Thanks..

    1. The FOB price is taken from the local agent for the specific car manufacturer. Toyota Lanka for Toyota, Stafford for Honda, etc. If you call the sales teams of these agents, most of them will give you the value (FOB and CIF both). Notable agents who are very unfriendly towards customers in Sri Lanka are AMW, who refuse to give the values, and even ask a charge for sharing the numbers. This might explain why Nissan is rather unpopular now in Sri Lanka, further aided by the rather bland cars they make I presume.

  17. Seems like the tax reduction is extensive, specially for the larger vehicles indicating the excise duty impact to be a positive one than a negative one to the consumer. A friend of mine cleared his Prado, and said the tax alone has reduced from 5.1mil to 3.9mil!! a further 1.1 mil reduction to the revised tax rates we have before.

    Taxes for the highly popular Allion is down from 2.1-2.2 to 1.6-1.7 million! Seems the cars recently cleared are costing the owners around 4mil, as opposed to 4.4mil before. The drop in the YEN conversion to the rupee has further helped reduce prices.

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