A coordinated search operation by the Sri Lanka Navy and the Police Special Task Force (STF) led to the arrest of a man and the seizure of 7,000 foreign cigarettes in the Mullipuram area of Puttalam.

The operation was carried out following intelligence received by SLNS Thambapanni under the Northwestern Naval Command. 

Naval personnel from SLNS Vijaya, together with STF officers, searched a house in Mullipuram and discovered the stock of foreign cigarettes stored illegally.

The suspect, a 49‑year‑old resident of Norochcholai, was taken into custody. 

Both the individual and the seized cigarettes were handed over to the Puttalam Police for further legal action. (Newswire)

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Six Chinese nationals have been arrested at Katunayake Airport after attempting to illegally bring a large stock of cigarettes into Sri Lanka, valued at approximately Rs. 11.38 million.

Customs officials, together with officers from the Customs Narcotics Control Division, detained the suspects during inspections early this morning. 

According to Customs officials, the group had arrived on three separate flights.

Authorities discovered 75,900 cigarettes manufactured in China concealed in their travel bags and backpacks. 

Katunayake Airport Customs has launched further investigations into the suspects, who remain in custody. (Newswire)

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Chairman of the Parliamentary Committee of Public Finance (COPF) MP Harsha de Silva has proposed to the Parliament that a new decision must be taken regarding the tax imposed on cigarettes. 

Addressing the Parliament today, MP Harsha de Silva pointed out that currently the revenue generated from cigarette tax for the government is less than that of the revenue generated by the cigarette company. 

Stating that a 75 per cent tax must be imposed on cigarettes, which is accepted even by the WHO and UNDP, MP Harsha de Silva said the current methodology followed in Sri Lanka for the imposing of tax on cigarettes was wrong. 

“Previously, the Committee stated that the increase in the excise duty on cigarettes cannot be approved without concrete data and called for justification regarding the steps taken to increase the excise duty on cigarettes. It was also pointed out that studies conducted on excise revenue from cigarettes indicate that this calculation method has led to a decline in government revenue while increasing the profits of particular manufacturing companies,” he said. 

MP Harsha de Silva went on to say that the calculation of tax for cigarettes was wrong and the tax has been declining in the past years.

“I propose that the government takes a fresh approach concerning the tax imposed on cigarettes. The government states that based on inflation a 4% tax is imposed on cigarettes. They said as inflation is 1.9%, an addition of 4 % amounts to a 5.9% tax on cigarettes. However, COPF pointed out that last year’s inflation was 1.2% and not 1.9% as stated by the government. Therefore, the tax on cigarettes should be 5.2%,” he said. 

Pointing out the lack of correct data and calculation methods, the COPF Chairman said this gives rise to discrepancies and hence, proposed that the government take a new decision in Parliament regarding the tax imposed on cigarettes. (Newswire)

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Three Directors of a private company in Kandana that sold and distributed cigarettes have been sentenced to 06 months with simple work, for the failure to pay Value Added Tax (VAT) amounting to Rs. 233 million.

Colombo Additional Magistrate Bandara Illangasinghe issued the order yesterday (17 Mar) after taking up for consideration a case filed by the Income Tax Commissioner against four directors of the company. 

The group had been notified in May 2024 to settle the unpaid VAT amounts for 2016, 2017, and 2019.

Their lawyer had informed the court that they were not bound to settle the amount as they no longer worked as the directors of the said company. 

However, the lawyer representing the Income Tax Commissioner, told the court that the accused had failed to pay VAT while serving as Directors of the Company and had only left after a case had been filed against them.

Taking into consideration the facts, the Colombo Additional Magistrate announced that the accused must pay the pending VAT and failure to do so would see them sentenced to 06 months with simple work.

As the accused had failed to settle the VAT payment, prison officials escorted the three accused to prison. (Newswire)

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The Parliamentary Committee on Public Finance (COPF) has denied approval for the proposal submitted by the Ministry of Finance to increase the Excise Duty on cigarettes.

The Committee deliberated on the Order under Section 3 of the Excise (Special Provisions) Act, No. 13 of 1989, and the Excise Notification No. 01/2025 issued under Section 22 of the Excise Ordinance (Chapter 52).

Presenting their views, Finance Ministry Officials said that under the Order pursuant to Section 3 of the Excise (Special Provisions) Act, No. 13 of 1989, an increase of 5.9% has been proposed for the excise duty imposed on all items subject to a fixed rupee value-based excise duty, including motor vehicles, cigarettes, aerated beverages, and tobacco products. 

They further said that under Excise Notification No. 01/2025 issued under Section 22 of the Excise Ordinance (Chapter 52), an increase of 5.9% in the excise duty on liquor products has also been proposed.

Chairman of COPF, MP Harsha de Silva said the increase in the excise duty on cigarettes cannot be approved without concrete data and emphasized the need for justification regarding the steps taken to increase the excise duty on cigarettes. 

Furthermore, he pointed out that studies conducted on excise revenue from cigarettes indicate that this calculation method has led to a decline in government revenue while increasing the profits of particular manufacturing companies. 

Therefore, he stressed the importance of ensuring that this tax revision would indeed be beneficial to government revenue. 

However, the Chair decided to reconsider the Order issued under Section 3 of the Excise (Special Provisions) Act, No. 13 of 1989 at the next Committee meeting following further clarifications from officials of the Ministry of Finance, regarding the excise duty increase.

Meanwhile, the proposal to increase the excise duty on liquor under Excise Notification No. 01/2025 issued under Section 22 of the Excise Ordinance (Chapter 52) was approved by the Committee. 

During the discussions, Members of Parliament raised concerns that such tax increases could potentially drive individuals towards the consumption and production of illicit liquor. 

In response, officials stated that raids against illicit liquor operations are being conducted systematically. 

Additionally, they mentioned that within the past two months, the production of liquor in the country had increased by 22%, while revenue had grown by 23%. 

Furthermore, it was stated that plans are underway to introduce a new category of liquor to minimize the consumption of illicit liquor.

The matters were raised during a meeting of the Committee on Public Finance, chaired by MP Harsha de Silva, in Parliament recently (06 Mar). (Newswire)

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Three Police officers, including a Sergeant, from the Colpetty Police have been arrested for allegedly demanding Rs. 50,000 from an Austrian tourist for being in possession of foreign cigarettes.

According to the Police, the Sergeant and two Constables had demanded the money under the pretext of not taking legal action against the female tourist. 

The three Police officers had been engaged in traffic duties near the Colpetty Junction on Tuesday when they had inspected the three-wheeler in which the tourist was travelling.

Upon inspection, the Police officers found a packet of foreign cigarettes in the tourist’s possession and informed her that such cigarettes were illegal in Sri Lanka.

They had then solicited a bribe of Rs. 100,000 to refrain from taking action against the tourist. 

The Police said the officers had managed to take the cigarette packet and Rs. 50,000 from the tourist during the incident. (Newswire)

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Prices of cigarettes have been increased under 3 categories from today (Jan 01) following the increase in Excise Duty and  Value Added Tax (VAT).

Cigarette prices have been increased by Rs. 5, Rs. 15 and Rs. 25 per stick. (NewsWire)

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Cigarettes of smuggled foreign brands and counterfeits in Sri Lanka have risen to 29 per cent of the market in the third quarter of 2023, it was reported. 

A periodic survey by the Colombo-based Research Intelligence Unit has found that Sri Lanka’s legal cigarette sales are in long-term decline.

The survey also reports that there has been a tendency for Sri Lanka’s non-tax-paid cigarettes to go up.

RIU says the key reasons for the rise in illicit sales were a currency crisis and inflation which had reduced purchasing power and tax hikes which had made smuggled products more competitive.

After two tax hikes in 2023, the legal product was around Rs. 125 for a cigarette stick, while the smuggled products were around Rs. 80 to Rs. 100. 

As per the survey, a brand called ‘Manchester’, was widely smuggled from East Asia.

RIU said a fall in smuggled cigarettes came from forex shortages and import controls in 2022, with legal cigarette sales rebounding to 2,825 million stocks and illicit sales down to 538 million stocks, bucking recent trends with the share down to 16 per cent.

However in the first half of 2023, after the first tax hike and gradual normalization of trade, monthly illegal cigarettes were estimated to be around 58.7 million sticks, annualized to 716 million sticks.

After a second price hike, monthly sales were estimated to have increased to 74.8 million stocks or around 898 million sticks a year. 

The survey, based on interviews with 2,500 individuals, says legal sales are projected to fall to 2.3 billion sticks, leading to an illegal share of 29 per cent. (NewsWire)

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The prices of cigarettes have been increased under four categories with effect from today.

It is reported that the price hike has been implemented following the increase in excise duty.

Thereby, the prices of cigarettes have been increased by Rs. 5, Rs. 15, Rs. 20, and Rs. 25 per stick. (NewsWire)

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