An audit report has revealed that hundreds of vehicles held by Sri Lanka Customs have deteriorated beyond use after years of storage, while the department has also failed to prevent significant tax revenue losses through undervalued vehicle imports.
Sri Lanka Customs is facing scrutiny following an audit report that documented the poor management of confiscated vehicles and substantial gaps in tax collection. According to the Customs Annual Performance Report for 2025, the department currently holds 329 vehicles at a privately leased storage facility in Mattakkuliya and another 108 at Ruhunu Pura Port. The audit found that most of these vehicles have deteriorated significantly due to prolonged exposure in open storage yards, with many now unsuitable for sale or use. The extended storage period—in some cases spanning up to eight years—has rendered auctioning these vehicles economically unviable, as they would no longer command reasonable market prices.
The audit attributed the deterioration to Customs' failure to comply with Section 109 of the Customs Ordinance, which presumably sets out procedures for managing such holdings. Beyond the storage issue, the report identified serious compliance problems in vehicle importation and tax collection. Investigators found that five imported vehicles had been cleared through Customs with invoices showing values substantially lower than those recorded in export declarations, resulting in an undeclared value of AUD 97,510. This discrepancy led to approximately Rs. 16.2 million being excluded from the taxable value, causing an estimated Rs. 26.7 million loss in government tax revenue.
The audit also examined pricing patterns for commonly imported vehicle types, comparing declared values against auction prices in Japan. Based on a sample of 29 vehicles imported in 2025, the report found evidence that declared values appeared systematically understated relative to comparable international market prices. This pricing discrepancy resulted in an estimated tax revenue loss of approximately Rs. 88.76 million for the government. These findings point to systemic weaknesses in both asset management and import valuation oversight within the Customs department.
