Duties and Tax Exemption

The Sri Lanka Customs is a non-ministerial government department, which performs the duties of collecting customs duties and other taxes and levies in Sri Lanka, under the oversight of the Ministry of Finance. The executive responsible is the director general, currently Major General (Retired) G. Vijitha Ravipriya.

Formally known as HM Ceylon Customs from 1947 to 1972, the department can trace its roots to 1806.^[3] Formally, the agency as it exists today was formed under the Customs Ordinance No. 17 of 1869, to which 51 amendments have been made to date. Being a center for trade in the Indian Ocean since antiquity, however, the history of collection of customs duties in Sri Lanka dates far back as 2nd century BC.^[

The department works with the powers vested under the Customs Ordinance, as well as through several other related enactments. The major functions of the department include the collection of government revenue as customs duty and other levies on behalf of several other government authorities and securing the nation's ports of entry with relation to the import and export of both commercial and personal goods. As such, it has limited policing powers, such as in the areas of the arrest and detention of possible suspects contravening customs and import/export laws, as well as the confiscation of contraband.

Annual budget: 2.21 billion LKR (2017, estimate)

Number of employees: 2,078 (2016)

Parent agency: Ministry of Finance

Founded: June 1806

For contact information regarding government custom authorities, please follow the link below: Importing Goods | Sri Lanka Customs

Link for duty free clearance: https://mfa.gov.lk/services/

Emergency Response

This section contains information which is related and applicable to ‘crisis’ times. These instruments can be applied when an emergency is officially declared by the Government.  When this occurs, it is expected that a streamlined process to import goods duty and tax free will be confirmed by GoSL.

Exemption Regular Regime (Non-Emergency Response)

 List of Customs Duty Exemptions (Imports)

The following categories of goods are exempted from Customs Import Duty, provided that the Director General of Customs is satisfied that those goods have been imported for the very purpose/proposes approved under the respective category and that the approval has been obtained from the Secretary to the Treasury, or from such other authority as delegated by the Secretary to the Treasury:

1. Passengers' baggage as defined by regulations made by the Minister of Finance under Section 107A of the Customs Ordinance (Chapter 235).
2. Films of educational, scientific, or cultural character produced by the United Nations Organization or any of its specialized agencies imported, on the recommendation of the Secretary of the respective line Ministry, subject to approval of the Director General of Customs.
3. Temporary import of professional and scientific equipment and pedagogic material imported subject to a guarantee prescribed by the Director General of Customs.
4. Articles awarded abroad to any person for distinction in art, literature, science or sport, or for public service or otherwise as a record of meritorious achievement and conduct, imported by or on behalf of that person, on the recommendation of the Secretary to the respective line Ministry, subject to submission of the relevant document to the Director General of Customs.
5. Raw materials and packing materials for the manufacture of pharmaceuticals, imported by the pharmaceutical manufacturers, on the recommendation of the Secretary to the Ministry of Health, subject to approval of the Director General of Customs.
6. Ayurveda, Siddha and Unani, raw and prepared drugs (other than Cosmetics Preparations) and medicinal plants and Ayurveda, Siddha and Unani medicinal raw materials, specified by notification published in the Gazette by the Director General of Customs in consultation with the Secretary to the Ministry of Indigenous Medicines, imported on the recommendation of the Secretary to the Ministry of Indigenous Medicines, subject to approval by Director General of Customs.
7. Packing materials for packing of Ayurveda, Siddha and Unani, raw and prepared drugs and medicinal raw materials other than Ayurveda / Herbal Soap and Ayurveda /Herbal Toothpaste, imported on the recommendation of the Secretary to the Ministry of Indigenous Medicines, subject to approval by Director General of Customs.
8. Prefabricated poultry houses, plant, machinery and equipment including parts and accessories for poultry industry, on the recommendation of the Secretary to the Ministry of Livestock Development, imported subject to approval by the Director General of Customs.
9. Machinery including medical, surgical and dental equipment, instruments, apparatus, accessories and parts thereof, ambulances, required for the provision of health services, imported on the recommendation of the Secretary to Ministry of Health, subject to approval by the Director General of Customs.
10. Articles of foreign production upon which import duty had previously been paid, re-imported subject to approval by the Director General of Customs.
11. Goods being gifts from persons or organizations overseas for the relief of distress caused by natural or other disasters, imported on the recommendation of the Secretary to the respective line Ministry, subject to approval of the Director General of Customs.
12. Goods for display or use at exhibitions, fairs, meetings or similar events, imported subject to a guarantee prescribed by the Director General of Customs.
13. Materials and parts for the fabrication of plant, machinery & equipment; capital and intermediate goods, and transport equipment, imported for the exclusive use of an industry which exports and/or supplies to direct exporters, 50% or more of its output, under such terms and conditions approved by the Secretary to the Treasury.
14. Inputs (raw materials, components and parts) imported under inward processing scheme for export, under such terms and conditions approved by the Minister of Finance.
15. Ornamental fish for re-export under such terms and conditions approved by the Director General of Customs.
16. Fish caught by a fishing vessel operating from a Sri Lankan port and which has been duly registered at a Port of Registry in Sri Lanka or issued with a landing permit by the Secretary to the Ministry of Fisheries.
17. Equipment and materials for use within the limits of an airport in Sri Lanka and parts and accessories for repair and maintenance of aircrafts in connection with the establishment and maintenance of an international air service, imported on the recommendation of the Secretary to the respective line Ministry, subject to approval of the Director General of Customs.
18. Apparatus, drugs and chemicals imported for educational purposes or for research work, imported on the recommendation of the Secretary to the respective line Ministry/authorized officers of respective Universities, subject to approval by the Director General of Customs.
19. Containers and accessories thereof, including container seals used for the safe carriage and security of goods, imported subject to approval by the Director General of Customs.
20. Products and preparations certified by the Ministry of Health as having been registered as drugs under the Cosmetics Devices and Drugs Act, imported subject to approval by the Director General of Customs.
21. Import of personal items (including gifts) worth not more than Rs. 15,000/= subject to approval by the Director General of Customs.
22. Import of samples in relations to business worth not more than Rs. 50,000/= subject to such terms and conditions as prescribed by the Director General of Customs.
23. Multi-layered packing materials consisting of laminates of paper, polyethylene film and aluminum foil, or of polyethylene and ethylene vinyl alcohol polymer used for packing of liquid milk, vegetable juices and fruit juices, imported on the recommendation of the secretary to the Ministry of Industry and Commerce, subject to approval by the Director General of Customs.
24. Long grain Pakistani rice (Basmati) and potatoes up to the limits of quota determined under the Pakistan – Sri Lanka Free Trade Agreement, on the recommendation of the Secretary, Ministry of Industry and Commerce or the Director General of Commerce, imported subject to approval by the Director General of Customs.
25. Any machinery, equipment, materials and utility vehicles required for the purpose of providing electricity including distribution of electricity, by the Ceylon Electricity Board and its subsidiary companies, and such items for the use of any project for the generation of power including solar and wind power, under any agreement entered into between Government of Sri Lanka and its development partners, as recommended by the Secretary to the Ministry of Power and Energy, subject to approval by the Director General of Customs.
26. Cinematographic goods and any film which is produced in Sri Lanka and sent abroad for further processing or printing/copying, with the recommendation of the National Film Corporation, imported subject to approval of the Director General of Customs.
27. Finished leather to be used by leather products manufacturing industry / Semi Processed (Crust) leather to be used by registered Tan / Leather Processing companies for the use of leather products manufacturers, imported on the recommendation of the Secretary to the Ministry in charge of the subject of industries and approval by the Director General of the Customs.
28. Tools, materials and equipment, imported by a manufacturer to manufacture electronic and robotic related products, according to design made in Sri Lanka on the recommendation of a national university, (established under the University Grants commission) through the Secretary to the Ministry in charge of subject of Higher Education / Technical Education and subject to the approval of the Director General of Customs.
29. Weapons, armaments, ancillary equipment, ammunition, explosives, communication equipment, military vehicles, air crafts, vessels, equipment and spare parts thereof capable of being used by the armed forces and imported by the Service Commanders and the Inspector General of Police for the purpose of national security as recommended by the Secretary to the Ministry of Defence, subject to approval by the Secretary to the Treasury.
30. Raw materials, components, parts and accessories for the manufacture of fishing boats by manufacturers, imported on the recommendation of the Secretary to the Ministry of Fisheries subject to approval by the Director General of Customs.
31. Following equipment, accessories and parts thereof, for the use in agriculture and related activities, imported on the recommendation of the Secretary to the Ministry in charge of the subject of Agriculture, subject to approval by the Director General of Customs; weather stations, greenhouses, poly-tunnels, sprinkler / misting systems, drip irrigation systems, fertigation systems, hydroponic systems, mulch films, pond liner, hydroponic trays, horticulture lamps and shade for netting.
32. Lacquers, coatings and varnishes used exclusively for coating of metal cans and closures which are used for packaging of food, imported on the recommendation of the Secretary to the Ministry of Industry and Commerce, subject to approval by the Director General of Customs.
33. Import of vehicles, chassis fitted with engines, bodies and cut portions, as defined in chapter 87 where excise (special provisions) duty is applicable.
34. Parts and accessories of motor vehicles and locomotives imported by the Sri Lanka Transport Board and Department of Sri Lanka Railway, on the recommendation of the Secretary to the Ministry of Transport, subject to approval by the Director General of Customs.
35. Unbranded new tyre casings without any markings, imported by a branded tyre manufacturer for local value addition process on the recommendation of the Secretary to the Ministry of Industry and Commerce and subject to the approval of the Director General of Customs.
36. Ingredients other than maize, lentils and rice, for the purpose of manufacturing animal and poultry feed, imported on the recommendation of the Secretary to the Ministry in charge of subject of Livestock Development, subject to approval by the Director General of Customs.
37. Any machinery, equipment, accessory and raw materials or intermediate materials, to be used for manufacturing of biodegradable packaging products by manufacturers of such products, registered under the Ministry in charge of the subject of Industries, on the recommendation of Secretary to the Ministry in charge of the subject of Environment and subject to approval of Director General of Customs.
38. I Sections (HS Code 7216.32) and Otherwise plated or coated with zinc (HS Code 7212.30), imported by a registered prefabricated building manufacturer on the recommendation of the Secretary to the Ministry in charge of the subject of industries and approved by the Secretary to the Treasury.

List of Exemptions - Excise (Special Provisions) Duty

Excise (Special Provisions) Duty is imposed in terms of section 3 of the Excise (Special Provisions) Act No. 13 of 1989. Please refer the Imports Tariff Guide for the rates specified. Under Extraordinary Gazette Notification No.1992/30 dated 10.11.2016, Excise (Special Provisions) Duty is exempted on the following:

1. A Motor Vehicle/Article imported under various agreements and MOU’s entered into by the Government of Sri Lanka with overseas organizations and foreign governments.
2. Articles of every description imported or cleared from Customs bond for the official use of the President or the Prime Minister of the Democratic Socialistic Republic of Sri Lanka.
3. Locally assembled/manufactured articles classified under the H.S. Code 84 and 85, with not less than 30% domestic value addition recommended by the Minister-in-charge of the subject of industries.
4. Every article entitled to duty free clearance under Passenger Baggage (Exemption) Regulations made under Section 107A of the Customs Ordinance (Chapter 235).
5. Every article cleared ex-bond for the use as ship stores or for re-export.
6. Every article manufactured in Sri Lanka and supplied to any exporter in Sri Lanka where sufficient proof is furnished to the satisfaction of the Director General of Excise that such manufactured article was exported.
7. A motor vehicle imported by a Member of Parliament of the 8th Parliament under a permit issued by the Secretary of line Ministry of the subject of Parliament Affairs with Cost, Insurance and Freight (CIF) value of the vehicle not exceeding United States Dollars (USD) 62,500/- or Euro 55,000/- or Japanese Yen 7.0 million.
8. A motor vehicle imported by the Governor of a Provincial Council, who have not imported or purchased a motor vehicle under any concessionary vehicle permit scheme during last five-year period, under a permit issued by the Secretary of line Ministry of the subject of Finance with Cost, Insurance and Freight (CIF) value of the vehicle not exceeding United States Dollars (USD) 62,500/- or Euro 55,000/- or Japanese Yen 7.0 million.

Excepted Articles- Nation Building Tax (NBT)

The Nation Building Tax was introduced under the Nation Building Tax Act, No. 09 of 2009 and subjected to amendments several times. The rate of NBT payable on the goods is indicated against each HS Code. Goods exempted from payment of NBT and that could be identified by HS Code are indicated directly in the Guide. As mentioned under Nation Building Tax Act, No. 09 of 2009 and amendments, excepted articles that are subject to conditions are indicated below:

1. Any articles not being plant, machinery or fixtures imported by any person exclusively for use in, or for, the manufacture of any article for export.
2. Any article which is imported, is proved to the satisfaction of the Commissioner General of Inland Revenue, that such article is imported to Sri Lanka for:
   1. Display at an exhibition.
   2. The temporary use in Sri Lanka in any project approved by the Minister.
   3. for the purposes of repairs to that article to be carried out in Sri Lanka; or
   4. any other similar purpose, and is to be re-shipped, within a period of one year from the date of importation of such article to Sri Lanka or within a period of ninety days after the completion of such project.

Source: Sri Lanka Customs National Imports Tariff Guide - 2018

Exemption Certificate Application Procedure

In the following table, please provide the practical information that is necessary in order to obtain a duties and taxes exemption certificate or similar document.  Include a process description (including contacts, departments, paperwork, etc.), making the distinction per counterpart/programme.  Also include the contact details of agents and authorities (where to apply for certificates/authorization) as well as time benchmarks.

Exemption Certificate Document Requirements

Customs Clearance

Transit Regime

The available Bonded schemes, (TIEP I/ TIEP IV/ Entrepôt etc

• Private Bonds - Warehouses owned by Private Companies to store goods without payment of duties and taxes under Customs purview
• Public Bonds - Warehouses owned by Sri Lanka Ports Authority to store goods without payment of duties and taxes under Customs purview.
• TIEP I - Facilitates the import of goods for manufacturing, processing, or assembling for export on conditional relief from payment of import Duties and Taxes
• TIEP IV - Facilitates the import of Capital and Intermediate Goods used for the manufacture of products and services for export, on whole or partial exemption of Customs Duties and Levies
• IG - Facilitates the import of goods for export purposes which does not qualify under TIEP - I, or TIEP -IV
• Entrepot - Facility to import manufactured or unmanufactured goods from one party of other country on free of Customs duty and other levies for Re-export to a third party of any country as imported or after simple processing (re-packing, re-labeling etc) with a value addition.
• INFAC - Facility provided by the Ministry of Commerce for Non - BOI Apparel Industries to import raw materials and accessories under duty free basis and manufacture and export.

Goods not permitted for bonding

• Duty paid goods
• Perishable goods
• Damaged goods
• Inflammable/ dangerous goods
• Prohibited goods
• Restricted goods without necessary license or permit

Permitted period for bonded cargo

• Two months for confectionary
• Three months for cigarette and tin foods
• Six months for wine, beer in bottles
• Two years for all other goods
• Under the regulation initial period will be six months and approval to be obtained for the extension of the period.