Recent allegations by Sanjaya Mahawaththa, convener of the Civil Intelligence Front (CIF), have raised concerns over an alleged multi-billion-rupee tax evasion and financial fraud scheme linked to vehicle imports in Sri Lanka.

Recent allegations by Sanjaya Mahawaththa, convener of the Civil Intelligence Front (CIF), have raised concerns over an alleged multi-billion-rupee tax evasion and financial fraud scheme linked to vehicle imports in Sri Lanka. According to Mahawaththa, complaints received by the organization point to a sophisticated network exploiting loopholes in the vehicle import and taxation system, with alleged activity concentrated in areas including Bambalapitiya, Kohuwala, Dehiwala and Papiliyana.

At the centre of the allegations is an under-invoicing practice in which the declared value of imported vehicles is allegedly reduced significantly below their actual cost. For example, a vehicle worth around Rs. 20 million could allegedly be declared to Customs at only Rs. 5 million, substantially reducing the amount of import duties and taxes payable to the state. The vehicle could then be sold to a customer at a price closer to its actual market value.

Mahawaththa further alleged that some transactions involve separate invoices to account for the difference between the declared and actual values. These additional payments are allegedly channelled through other entities or recorded under descriptions such as spare parts, making it more difficult for authorities to identify the full value of the transaction.

Another concern raised by the CIF is the potential exposure of vehicle buyers who may be unaware of the alleged irregularities. According to Mahawaththa, some dealerships encourage customers to allow the dealer to handle the vehicle registration process. This can leave important documentation and communication between the dealership and the Department of Motor Traffic, while the buyer may receive an invoice that does not reflect the vehicle’s actual purchase price.

The allegations have also raised concerns about the wider impact on state revenue and legitimate businesses. If vehicles are systematically under-valued during importation, the practice could deprive the government of substantial tax revenue while giving businesses involved in such practices an unfair advantage over compliant dealers.

The Civil Intelligence Front has urged prospective vehicle buyers to carefully examine all documentation and ensure that invoices accurately reflect the full amount paid for a vehicle. Buyers are also being advised to consider handling registration procedures directly with the Department of Motor Traffic and to report suspected discrepancies to the relevant authorities.

The CIF said that it is preparing to hand over evidence files relating to the allegations to investigative authorities. Any specific allegations of criminal wrongdoing would ultimately need to be established through an appropriate investigation and legal process.