Sri Lanka Customs initiates major technological overhaul of its vehicle clearance protocols
Sri Lanka Customs has initiated a major technological overhaul of its vehicle clearance protocols to seal a loophole that previously allowed the tampering of motor vehicle data during registration.
The move follows an inquiry by the Committee on Public Accounts (COPA), which identified that the absence of a secure computerised network between the Customs Department and the Department of Motor Traffic (DMT) had left the door open for fraudulent modifications of vehicle specifications.
The report, presented in Parliamentary Series No. 243, highlights past instances where imported vehicles were registered by changing critical information such as the year of manufacture, country of origin, and cylinder capacity because these details were not digitally linked to the Customs system.
The new “digital firewall” centers on the “system-to-system integration” of the ASYCUDA World platform, which has been updated to formalise the transmission process.
Under this upgraded framework, specific data recorded in the “Vehicle Sheet” of the Customs Register—including the engine number, chassis number, vehicle model, and the exact amount of Customs Import Tax paid—is now electronically transmitted directly to the DMT. This ensures that the data used for the initial registration of a vehicle in Sri Lanka matches the data cleared by Customs, significantly curbing the risk of revenue leakage through duty and tax frauds. By enforcing this data transmission, the government expects to verify that all due customs duties have been settled before any vehicle is officially registered.
Historically, the most common forms of evasion involved the misclassification of vehicles and the manipulation of their physical specifications to slip into lower tax brackets. High-capacity engines were often reported as having lower cylinder capacities, as excise duties in Sri Lanka can jump by millions of rupees for even minor increases.
Additionally, vehicles were frequently registered with altered manufacturing years to bypass age restrictions or duty-free permit limitations. To combat this, the DMT has been granted “view-only” access to the ASYCUDA World system, allowing officials to perform real-time verification of daily transmitted data against the original Customs declaration.
The fiscal impact of these measures is central to the government’s broader strategy to strengthen national revenue. According to the COPA report, the Ministry of Finance, Planning and Economic Development is prioritising the strengthening of financial management within Sri Lanka Customs to ensure that all revenue due to the state is collected without leakage.
The integration aims to eliminate the “possibility of irregularities” that have historically deprived the treasury of substantial income. To maintain this fiscal discipline, the Ministry now conducts quarterly Audit Management Committee meetings to provide necessary guidance and oversight.
The current status of the proposed “quad-agency” digital ecosystem remains in a transitional phase. While Sri Lanka Customs “indisputably admits the requirement” of electronically linking four major institutions—Customs, the DMT, the Department of Inland Revenue, and the Department of Import and Export Control—the integration is currently active primarily with the DMT.
By eventually exchanging registration and tax data among all four bodies, the government aims to create a transparent loop where a vehicle’s entire fiscal history is visible to all relevant authorities. This modernisation, formalised in a report submitted to Parliament on November 6, 2025 by President Anura Kumara Dissanayake, is seen as a critical step in ensuring that Sri Lanka Customs continues to meet its ambitious revenue targets in a more transparent and efficient manner.
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