BYD EV Scandal Erupts: Who Will Pay for the Tax Evasion Shock?

A major electric vehicle import scandal has jolted Sri Lanka’s transport and customs sectors after nearly 1,000 brand-new BYD electric cars were detained at the port over suspected tax evasion through motor capacity misreporting.

Customs officials, tipped off by a group of used vehicle importers, uncovered discrepancies between the declared motor capacity of the vehicles and their actual performance potential — a difference that could mean billions in lost tax revenue.

What Went Wrong?

The detained BYD vehicles were imported with paperwork showing a 100-kilowatt (kW) motor — placing them in a lower tax bracket. But industry insiders suspect these vehicles are actually fitted with 150 kW motors, which would make them liable for significantly higher import duties.

The allegation? Either:

False documentation was submitted to intentionally under-declare motor specs, or

The vehicles were fitted with software-limited motors, temporarily reducing power output to 100 kW to dodge higher taxes.

Under Sri Lanka’s tax laws, duties are calculated based on true motor capacity, not restricted output — software or otherwise.

The Minister Speaks

In a candid televised interview, Minister of Labour and Deputy Minister of Economic Development Anil Jayantha confirmed that the scandal is under full investigation.

“The documents I’ve seen show clear inconsistencies. Some importers of used vehicles are taxed at 150 kW for the same models, while these brand-new imports are somehow declared at 100 kW. Customs is verifying the truth — and if fraud is found, action will be taken.”

He added that the Sri Lankan Gazette is clear: what matters is the inherent capacity of the motor, not whether it’s been temporarily toned down.

Fallout for Consumers

Many customers have already placed deposits or fully paid for these vehicles. Jayantha said if wrongdoing is confirmed, some refunds may be possible through bank guarantees — but it’s unclear whether the importing companies will step up.

“If fraud is proven, it’s the importers who must be held accountable, not the consumers,” he added.

Past Imports Under Scrutiny

This is not just about one shipment. Customs may now launch a full-scale audit into previously released vehicles brought in under similar documentation. If evidence of systemic tax evasion surfaces, retroactive penalties and back taxes could follow — and possibly criminal prosecutions.

Who Will Take the Fall?

Were Customs officials complicit, negligent, or misled?

Did importers knowingly submit false declarations?

Were vehicle manufacturers or third-party agents involved in document manipulation?

With the country already under economic strain, public anger is rising at what many are calling a white-collar scam dressed in green tech clothing. As the investigation deepens, political insiders suggest that heads could roll — both in the private sector and within government ranks.

A Ticking Time Bomb for the EV Industry

This scandal has thrown a wrench into Sri Lanka’s push toward electric mobility. Industry experts are warning that public trust in EV imports is at risk, and that regulatory tightening is inevitable.

For now, all eyes are on Customs, the Ministry of Finance, and the courts — as the question becomes not just what happened, but who’s going to pay for it.