The Ministry of Finance announced today that the United States has reduced the proposed 12.5% additional tariff on Sri Lankan exports to a minimum of 10%, following Sri Lanka’s decision to ban the import of goods produced using forced labour.

According to the Ministry, the move is expected to deliver positive results for exporters, while reflecting Sri Lanka’s ongoing commitment to fair trade, responsible business practices, and internationally accepted labour standards.

Officials said the tariff adjustment will enhance the competitiveness of Sri Lankan exports in the US market, sending a strong signal to investors and buyers about the country’s dedication to sustainable economic reforms.

The Ministry added that the revision demonstrates Sri Lanka’s determination to build a modern, competitive trading environment that supports exporters and contributes to sustainable economic growth. (Newswire)

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The Ministry of Finance has invited think tanks, universities, professional bodies, private sector institutions, registered NGOs, and individual citizens to submit proposals aimed at strengthening Sri Lanka’s medium‑ and long‑term revenue strategies.

The invitation comes through the Revenue Management Committee, established under the State Finance Management Act No. 44 of 2024, which is tasked with preparing strategies to raise government revenue, improving coordination among revenue‑generating institutions, and providing policy guidance. 

The government’s long‑term target is to increase state revenue to 20% of GDP by enhancing efficiency, broadening the tax base, and formalizing the informal economy.

Proposals may cover areas such as:

• Medium‑ and long‑term strategies to increase revenue
• Formalizing the informal economy and expanding the tax base
• Digitization of revenue institutions to improve efficiency
• Policy‑aligned collection methods
• Encouraging voluntary tax compliance and strengthening administration
• Technology‑based revenue systems and data analysis
• International best practices in revenue administration

Proposals must be submitted in PDF format, including a summary of the strategy, implementation method, expected fiscal or administrative impact, potential risks, and relevant institutional or personal details.

The deadline for submissions is June 16, 2026, with proposals to be sent via email to dgfp@fpd.treasury.gov.lk. 

Issuing a notice, the Committee said it reserves the right to accept, reject or seek further clarifications on submissions. (Newswire)

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The death of the Assistant Director of the Ministry of Finance’s Department of External Resources, who had been interdicted over the alleged misappropriation of USD 2.5 million Treasury funds, has been ruled a suicide.

Sri Lanka Police said a panel of Judicial Medical Consultants appointed to conduct the post-mortem examination concluded that all injuries were self-inflicted and that the cause of death was suicide.

The official, identified as Ranga Rajapaksa, was found dead at his residence in Kuliyapitiya on Friday (30).

According to police, the body was found in the garden of the residence after his daughter noticed him lying there and alerted other family members.

Police officers who arrived at the scene observed bloodstains nearby. Authorities also reported several injuries on the body, including cuts to one leg and an injury to an arm. A small knife had also been recovered nearby.

Investigations were initially launched into the incident as a suspicious death to determine whether it resulted from homicide, suicide, or an accident.

The Kuliyapitiya Magistrate visited the scene and conducted a magisterial inquiry on Friday. The body was later transferred to the Kuliyapitiya Teaching Hospital for a post-mortem examination.

Subsequently a four-member panel of Judicial Medical Consultants was appointed to conduct the post-mortem examination of the official, who had been under interdiction over allegations related to the misappropriation of Treasury funds. (Newswire)

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Sri Lanka’s Finance Ministry and the Inland Revenue Department have held high-level discussions to broaden the tax base, simplify the tax filing process, and reduce bureaucratic barriers, the ministry said in a statement.

The meeting, chaired by Deputy Minister of Economic Development Nishantha Jayaweera, was attended by Inland Revenue Commissioner General Rukdevi Fernando and senior officials.

The Finance Ministry said officials were directed to take steps to encourage voluntary tax compliance and to accelerate taxpayer awareness initiatives.

During the meeting ,the Deputy Minister had instructed that taxpayer inconveniences in filing returns be minimized and that forms be simplified as much as possible.

He had also called for a practical plan from the Inland Revenue Department to meet the annual revenue target.

The discussion focused on strategies to achieve the government’s revised tax revenue goals for 2025.

According to the 2026 budget, Sri Lanka has raised its 2025 tax revenue target from Rs. 4,590 billion to Rs. 4,725 billion, an increase of 2.9%. 

This revision is attributed to higher projected earnings from income tax and levies on goods and services, including vehicle import taxes.

The income tax target for 2025 was increased by 3.7% to Rs. 1,210 billion, while the target for goods and services levies rose by 6.5% to Rs. 2,953 billion. (Newswire)

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The Ministry of Finance says Sri Lanka’s state-run National Savings Bank (NSB) has provided a Rs. 6 billion dividend to the Treasury of Sri Lanka. 

According to a Finance Ministry statement, NSB has reported a profit before tax of Rs. 25.5 billion for the first half of 2025, while it had reported a profit before tax of Rs. 28.5 billion for 2024.

The official announcement of this contribution was handed over to Treasury Secretary Harshana Suriyapperuma at the Ministry recently. (Newswire)

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The Ministry of Finance has announced that a concessionary Pledge Loan Scheme for SME paddy millers and cooperatives will launch on July 1, 2025.

According to the Finance Ministry,  the Pledge Loan Scheme is being implemented to support Yala season paddy purchases. 

Loans up to Rs. 50 million will be available at 7% annual interest, repayable within 180 days, the Finance Ministry added. (Newswire)

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The Government has not taken a policy decision yet regarding the Colombo Light Rail Transit (LRT) project which was to be implemented with the support of Japan, Director General of the Department of External Resources of the Ministry of Finance, R.M.S.P.S. Bandara said. 

He made the remark while responding to a question raised by a journalist during a press briefing held on the signing of the debt restructuring agreement with Japan, which took place at the Finance Ministry today.

R.M.S.P.S. Bandara further said that fresh discussions will be required to be held with the Government of Japan about the LRT project.

The project which was being planned under the Yahapalana Government was later cancelled by former President Gotabaya Rajapaksa without any discussion with Japan or its main funding agency Japan International Cooperation Agency (JICA) in 2021.

Upon coming to power, former President Ranil Wickremesinghe extended an apology to the Japanese Government in May 2023 during his official visit to Tokyo for the cancellation of the project. 

However, announcing the resumption of 11 suspended projects in Sri Lanka due to its economic crisis, in 2024, Japanese authorities said that the $1.5 billion LRT project could be considered a new possible future project. (Newswire)

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The Ministry of Finance has announced the allocation of US$ 10.5 million for the recommencement of the construction of the Kurinchakerny Bridge located in the Kinniya Divisional Secretariat in the Trincomalee District.

Issuing a statement, the Finance Ministry said that the remaining funds of the Peradeniya- Badulla- Chenkaladi Road Development project have been allocated for the Kurinchakerny Bridge project.

The amended agreement in this regard was signed by Finance Ministry Secretary Mahinda Siriwardena and Director (Legal) of the Saudi Fund for Development Abdulmohsen A Almudla. 

The recommencement of the construction of the Kurinchakerny Bridge will facilitate the transportation and business needs of approximately one hundred thousand residents in Kinniya, Trincomalee. (Newswire)

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The Ministry of Finance says false information is being circulated on social media linked to Deputy Minister of Finance and Planning Harshana Suriyapperuma.

Issuing a statement, the Finance Ministry said false information was being spread that the Deputy Minister had made a promotional statement regarding a meeting with TTK Application Promotion Limited, an online business. 

The Finance Ministry clarified that the Deputy Minister had not engaged in any meeting with TTK Application Promotion Limited or any such company. 

Stating that the company in question was utilising the name of the Deputy Minister to illegally collect money, the Finance Ministry said that steps are being taken to initiate legal action. (Newswire)

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The government has commenced a pledge loan scheme under a concessionary interest rate for Small and Medium-scale (SME) Paddy Millers and Cooperative Societies for purchasing paddy in the 2024/2025 Maha Season, to maintain a reasonable price for farmers.

According to a statement from the Department of Development Finance of the Ministry of Finance, the implementation period of the concessionary loan scheme is 03 January to 15 May 2025. 

The target Group of this loan scheme is Small and Medium-scale (SME) paddy millers and Cooperative Societies, subject to the maximum daily paddy milling capacity of 25MT per day. 

Under this loan scheme, all borrowers can obtain loans at an interest rate of 7% per annum with an amount of Rs.50 million and the respective loan should be repaid within 180 days. 

The total value of the loans to be disbursed by the Banks is Rs. 10,000 million under this loan scheme.

It has also been planned to purchase paddy at a Minimum Purchase Price (MPP) declared by the Department of Agriculture to ensure a reasonable price for paddy harvest by farmers. (Newswire)

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The government has instructed state institutions to auction selected luxury vehicles with a high-capacity engine, including V8 models, and provide a report on the income generated before 01 March 2025 to the Ministry of Finance.

According to the Lankadeepa newspaper, the instructions have been issued by Finance Ministry Secretary Mahinda Siriwardena to all heads of state institutions via a special circular.

Per the circular, vehicles that fall under the HS 87.03 category of the Customs Ordinance, such as Petrol vehicles with a high-capacity engine of over 1800CC and Diesel vehicles with a high-capacity engine of over 2300CC, such as double cabs, single cab, vans, bus, lorry, and trucks, are to be auctioned.

The Finance Ministry has prohibited state institutions from acquiring any of the vehicles that are to be auctioned. 

The circular further points out that it is the responsibility of all state institution heads to ensure that all state vehicles are monitored and utilized in a manner that incurs less expense for the state entity and prevents its misuse. (Newswire)

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The Ceylon Chamber of Commerce has issued a statement clarifying that it was not connected to recent media statements related to Central Bank policies.

The Ceylon Chamber of Commerce said it was in no way connected to or involved with the statements recently attributed to “The Sri Lanka Chamber of Commerce” regarding directives issued by the Deputy Minister of Finance and the Central Bank of Sri Lanka.

Issuing a statement, the Ceylon Chamber of Commerce confirmed that no employee or representative of it was involved in the media report or the statements made during the referenced press briefing.

“Any official views or positions of the Ceylon Chamber are communicated directly by authorised representatives through our established channels. For accurate information regarding our work and statements, please refer to our official website at www.chamber.lk, or contact the Ceylon Chamber directly,” it added. (Newswire)

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The Ministry of Finance has given details on the government’s tax policy and expenditure management measures. 

Following are the answers to fifteen questions from the Finance Ministry in this regard;

1. Why did the government increase tax rates as a first measure to address fiscal weakness? 

Weak government revenue was one of the fundamental causes of the economic crisis. Whilst revenues have been on a declining trend for over 3 decades, the ill-timed tax reductions announced at the end of 2019 was a major contributor to the country’s credit rating downgrades and subsequent sovereign debt default. 

While government revenue had declined to just 8.3% of GDP by 2021, public expenditure remained at 20% of GDP, requiring inflationary monetary financing (money printing) to finance the resultant budget deficit of 11.7% of GDP. Therefore, urgent revenue measures were essential to phase out monetary financing and bring inflation under control. 

Inflation has a far more devastating and non-discriminatory impact in terms of the destruction of income and wealth. Inflation which reached a peak of 70% in 2022, had a disproportionate adverse impact on the poor. 

Fiscal consolidation was also a key component of the overall macroeconomic reform programme, including the debt sustainability framework, in which the expected primary budget surplus of 2.3% of GDP in 2025 will be one of Sri Lanka’s key contributions to the debt restructuring effort. Enhancement of government revenue from 8.3% of GDP in 2021 to 15.1% of GDP by 2025 is an essential element towards achieving this primary balance target.

2. Are there other means of enhancing government revenue other than taxes? 

In countries like Sri Lanka, which do not have abundant natural resources such as oil or minerals, tax revenue is the key contributor to government revenue. Historically, tax revenue contributes around 80% of Sri Lanka’s government revenue. There is a misconception that exports, tourism, and other external inflows accrue to the government 1 Highlights of the Government Tax Policy and Expenditure Management Measures Website Date www.treasury.gov.k 130.82.024 revenue – this is not the case. Those revenues are collected by private enterprises, and the government only receives the corporate tax component of the profit of those enterprises. Dividends and levies from state enterprises contribute to government non-tax revenue, however, historically this has been a net drain on Sri Lanka’s fiscal balances due to losses incurred by state enterprises. Fines, fees, and rents contribute only a very small component of Sri Lanka’s government revenue. Therefore, taxes make up the largest contribution. 

3. Why was tax compliance and tax administration improvements to address “tax leakages” not the first measure to increase revenue before increasing tax rates? 

Tax administration and tax compliance enhancement measures play a very important role in revenue enhancement, however they typically take a long time to yield returns. This is because such measures require administrative, technological, and process-related reforms which take time to implement and show results. In Sri Lanka’s case, tax administration measures were implemented in parallel to tax rate increases, but the short-term increase in revenue is derived almost entirely from the increase in tax rates. Given the urgency of increasing revenue as outlined in point 1 above, it was necessary to adjust tax rates as an immediate measure to deal with the economic crisis. 

It is also important to note that the International Monetary Fund (IMF) does not consider revenue gains from improvements to tax administration and compliance as a tangible short-term revenue measure. The IMF may include incremental revenue gains from tangible administrative measures (such as the 0.3% GDP gain expected from VAT administration improvement in 2025), however, these do not substitute for tangible tax policy measures, particularly when considering primary budget balance inputs for the DSA framework. 

More importantly, the realities of Sri Lanka’s Treasury cash flow pressures are such that mandatory payments on interest, salaries, and essential welfare dominate the government expenditure. It is simply not feasible to hope for revenue gains from “addressing leakages” to provide the revenue flows to meet these payment obligations. Realistic, and specific revenue measures are necessary in this case. 

4. What were the tax administration and compliance improvement measures implemented by the government?

• Digitisation of tax processes with e-filing of tax returns becoming mandatory. 
• Mandatory information sharing between key government agencies and the tax collection agencies such as the IRD, Customs, and Excise. 
• Upgrading the management information system at the IRD, RAMIS, with the implementation of RAMIS 2.0.
• Steps are now underway to further upgrade to RAMIS 3.0. Risk-based audits are being expanded. 
• Expanded TIN registration, with steps being taken towards making key economic transactions such as bank accounts, letters of credit, and others requiring a TIN. 
• Expanding the use of Point of Sale (POS) devices to support VAT collection as articulated in the 2024 budget speech!

These measures are beginning to work since there was over a 128% growth in active tax files in 2023 (997,858) compared to 2022 (437,547). As the tax base expands in this manner, the burden of taxation on a limited number of taxpayers gets eased. The government’s expectation is that once these tax administration measures start taking effect and contributing to revenue flows, it will be possible to gradually adjust the tax rates downwards in a manner that does not compromise revenue targets being reached. The first such proposed adjustment to the Personal Income Tax bands has already been announced. 

5. Is the government taking steps to curtail government expenditure instead of increasing taxes?

The curtailment of government expenditure has to be carefully managed. Since early 2022, the Treasury has issued a number of circulars that impose significant restrictions on public expenditure to maintain fiscal discipline and support the fiscal consolidation process. This has included enhanced disciplines on new hiring, overtime payments, fuel consumption and vehicle usage, expenditure on events, foreign travel, and so on. These policies have continued to date. Increased use of digital measures to control expenditure such as the completion of the roll-out of the Integrated Treasury Management Information System (ITMIS) is a key initiative. The government is also expanding the use of e-procurement to enhance transparency and improve price discovery. Ongoing measures to increase transparency in procurement through the Electronic Government Procurement (eGP) System will also support cost management in the medium term. Overall digitisation of public services, supported by unique digital identification (SL- UDI) which is in the advanced stages of implementation, is also expected to make significant savings in public expenditure. 

The government introduced a new initiative of zero-based budgeting specifically for 10 of the largest spending ministries. Accordingly, these spending agencies need to justify all expenditures incurred, including legacy expenditures, to demonstrate the purpose of such spending and that spending is taking place in the most efficient manner possible. This would help eliminate wastage, duplicate spending, and identify redundant processes – all of which will help manage overall public expenditure. The 2024 and 2025 budget calls have both built in the principles of zero based budgeted. 

The government has also taken steps to right-size the public service, enabling government expenditure on public sector salaries to decline from 4.8% of GDP in 2021 to 3.4% of GDP in 2023. This has enabled the government to adjust public sector wages gradually in 2024 and proposed adjustments in 2025 without undermining the overall fiscal targets. Continued efforts at digitisation will support efforts to right-size the public service, along with sector-specific initiatives such as the Defence 2030 review. Another key expenditure reduction measure has been the curtailment of losses of State Owned Enterprises, which have previously been a regular drain of public finances. 

The above-mentioned measures are important in terms of controlling wastage, however, public expenditure is largely non-discretionary in nature. For instance, in 2023, interest cost amounted to 8.9% of GDP, public sector salaries accounted for 3.4% of GDP, and essential welfare transfers amounted to 3.6% of GDP a( total of 15.9% of GDP), whereas total revenue was just 11.1% of GDP in 2023. Furthermore, Sri Lanka requires higher spending in priority areas such as public health, education, public transport, social protection, digitisation, and others. Therefore, even with the expenditure management measures outlined previously, it is essential that the government revenue base continues to increase from the record-low 8.3% of GDP, which was one of the lowest levels in the world, to a level of at least 15% of GDP (which is still below peer country averages). Ideally, in the longer term, revenue should be higher than 15% of GDP to enable high-quality public expenditure to support long-term sustainable economic growth. 

6. Why is Sri Lanka’s Personal Income Tax rate as high as 36%? 

It must be understood that not all persons pay an income tax of 36%. The rate of 36% applies only to the top marginal rate of income tax. A person earning Rs. 200,000 per month only pays Rs. 10,500 per month in tax, which is an effective rate of 5.3%. A person earning Rs. 450,000 per month pays an effective tax rate of 19.7%. Even at an income of Rs. 1 million per month, the effective rate of tax is 28.7%, which is below 36% which is the common public perception. Sri Lanka’s top tax rate of 36% is not high compared to regional peers. For instance, Thailand, Indonesia, and Vietnam all have a top personal tax rate of 35%. 

7. Why is Sri Lanka’s tax free threshold as low as Rs. 100,000 per month? 

Sri Lanka’s tax-free threshold is set at Rs. 100,000 per month which results in only the top 20% of income earners being subject to income tax. This was clearly established in the Supreme Court judgment on the amendments to the Inland Revenue Act in 20224. The fact that Sri Lanka’s income structure is skewed in this manner is also supported by the fact that the total number of active credit cards in Sri Lanka is under 2 million, less than 10% of the total population.

As soon as income earners enter the tax threshold, the effective tax rate is very low at a 6% marginal rate. Therefore, a person earning Rs. 125,000 per month, would only pay tax of Rs. 1,500 per month, or 12.% of their total income. 

8. What are the feasible reforms to Sri Lanka’s personal income tax structure?

Whilst the top tax rate and the tax-free thresholds are reasonable given existing income structures and peer comparisons, the tax bands are quite narrow at Rs. 500,000 each. This was necessary at the beginning of the reform effort given the necessity to demonstrate the best efforts of Sri Lanka’s top 20% of income earners towards restoring debt sustainability. However, as revenue targets have begun to be met in 2024, it is now feasible to review the tax bands in a manner that does not compromise revenue targets. 

Accordingly, the government has proposed to broaden each tax band to Rs. 720,000 from Rs. 500,000. This would provide significant but targeted relief to those most affected by the tax increases. For instance, a person earning Rs. 300,000 per month will receive a tax relief of 25% compared to present levels. However, the relief declines at higher income levels, where someone earning Rs. 750,000 per month gains a smaller relief of around 8% compared to present levels. The revenue impact resulting from this proposal is very limited at around 0.08% of 2025 GDP and compensating measures have already been discussed with the IMF. 

9. Why does Sri Lanka tax exporters and other strategic sectors? 

In the past, Sri Lanka used preferential tax rates to encourage strategic sectors. Unfortunately, the outcome was a continuous proliferation of such preferential rates and tax exemptions. For example, in 2017, almost all sectors paid a preferential tax rate of 14%, including exports, SMEs, tourism, IT, agriculture, and education. This set of exemptions expanded with the tax policy changes in 2019, with the construction sector, private healthcare, and manufacturing (18%) all becoming eligible to lower tax rates given their strategic importance. However, this resulted in a continuous erosion of Sri Lanka’s tax base and the revenue shortfall from that preferential sector must be caught up through higher taxes from the rest of the economy. What starts as a preferential rate to exporters will almost certainly expand to other strategic sectors in the future as has been amply demonstrated in Sri Lanka’s history.

In order to encourage strategic sectors, the government must make all efforts to reduce the cost of establishment of a company, whether it is in terms of access to land, access to electricity, trade facilitation measures and others. However, once a company is profitable, it should contribute its fair share in taxation. Profit must be treated as profit regardless of which sector it is generated from, and tax policy should be used purely as a tool for collecting revenue to fund public services, and not as a tool to promote particular sectors. In the future, once tax administration and compliance measures have enabled revenue to grow and tax targets to be met, it would be possible to consider downward revisions of the standard corporate tax rates across the board, without providing concessional rates to specific sectors. 

10. When will the government reduce VAT? 

Prior to considering any reductions to VAT, it would be prudent to review turnover-based taxes such as the Social Security Contribution Levy (SSCL). Such taxes are cascading in nature and highly distortive as a result, whereas VAT only applies to the value-added component. At present, the adverse revenue impact of any changes to VAT or SSCL would significantly compromise revenue targets. However, there are numerous ongoing measures to improve VAT compliance which are expected to improve revenue yield from VAT. Therefore, downward adjustments to SSCL could be considered at a later stage once these tax administration measures improve revenue yields and revenue targets can be more comfortably met going forward. 

11. Does the government impose VAT on sensitive sectors such as health, education, public transport? 

The government does not impose VAT on a few essential goods and services, including healthcare, education, public transport, and essential food items. The full list of exempt items is available in the Value Added Tax Act. This is similar to the practice of successful economies which maintain a broad VAT coverage with very limited exemptions of only a few items.

12. Why does the government impose VAT on items such as petrol and diesel since these can have an impact on general inflation? 

Fuel products have long been exempt from VAT, however, they are very high-revenue items, and the previous VAT exemption resulted in a large loss in revenue. While the VAT rate was adjusted and exemptions were removed from January 2024, the Colombo Consumer Price Index saw a decline from an index level of 195.1 in December 2023 to 191.1 by August 2024. The retail price of key fuels also saw declines in prices in spite of the imposition of VAT due to favourable macroeconomic developments that resulted from improved fiscal conditions. Therefore, the fears that the broadening of the VAT base would result in higher inflation were entirely unfounded. 

13. Why doesn’t the government use multiple VAT rates for different products? 

In the past, Sri Lanka, like other jurisdictions, adopted multiple VAT rates targeting different products with various sensitivities and strategic importance. The outcome has been a gradual erosion of revenue since the lower rate product categories keep expanding over time. Such multiple rates also make the tax structure more complex, and subjective in nature, opening up room for corruption vulnerabilities. Therefore, like many other jurisdictions, Sri Lanka has shifted to a unified VAT rate. The principle of not using tax policy to further other goals of the government and instead using tax policy purely as a revenue collection mechanism, applies in this case as well.

14. Should the government do away with Value Added Tax and shift to a turnover tax structure? 

There have been claims that it would be beneficial to shift to a turnover tax instead of VAT. However, a turnover tax is extremely distortive in nature, which is why most countries try to move away from turnover tax to a more efficient value-added tax system. 

A turnover tax applies at each stage of the value chain. The example for a simple rubber slipper; a turnover tax would be applied at the stage of raw rubber, then at the factory for rubber processing the full value will be taxed, then again at the factory where the slipper is produced the full turnover will be taxed, again at the distribution stage it is taxed, and finally at the retail stage the full value is taxed. At each point of the value chain, the full value of the product is taxed in a cascading manner.

This type of taxation is highly distortive since it discourages production that is complex and involves multiple stages of value addition -and it favours basic low-value products. This is exactly the opposite direction that Sri Lanka’s economy should be pursuing – which is progressively shifting to higher value, more complex products. 

15. Why can’t the government immediately collect taxes in arrears and use that to reduce the tax burden on citizens? 

There is a false narrative that there is a large volume of taxes in default of around Rs. 1 trillion (IRD has outstanding taxes of Rs. 1,066 billion). However, out of this amount, Rs. 878 billion from IRD are taxes that are in various stages of the appeals process. Sri Lanka being a democratic system, has a system of checks and balances where the government authority (in this case revenue collection agencies) cannot unilaterally force the citizen to pay whatever tax is assessed. If the citizen has a legitimate grievance regarding the assessment that is made, he or she has the right to appeal through the judicial process. It is true that it is necessary to make the appeals process more efficient, and this is happening through a broader process of judicial reforms. However, nobody would expect the state to be able to unilaterally appropriate all taxes that are in the appeals process and completely go against due process. 

Out of the balance taxes in arrears outside the appeals process of Rs. 18 billion as of the end of 2023, in the first 6 months of 2024, the Inland Revenue Department has already collected Rs. 104 billion. (Newswire)

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The Sri Lankan Government is considering lifting restrictions imposed on vehicle imports, subject to conditions, it was reported.

According to NewsFirst, a senior spokesperson for the Ministry of Finance said plans are underway to lift the vehicle import restrictions, subject to conditions, by the end of 2024 or the beginning of 2025. 

The senior Finance Ministry spokesperson further said that recommendations from the Committee appointed by President Ranil Wickremesinghe in this regard would also be considered when arriving at a final decision on the matter. 

The move comes at a time when State Minister of Finance Shehan Semasinghe had also recently revealed that discussions were ongoing related to the restrictions imposed on vehicle imports.

Earlier this month, State Minister of Finance Ranjith Siyambalapitiya also announced that the ban imposed on the importation of vehicles will continue to be relaxed in phases going forward.

State Minister Siyambalapitiya told the media that the government has taken to relaxing the vehicle import ban in phases based on the requirements of various sectors. 

Sri Lanka imposed a ban on vehicle imports following the impacts of the coronavirus pandemic in 2021/2022 and continued with the decision due to the subsequent economic crisis faced by the nation. 

However, the government commenced providing exemptions to vehicle imports in phases from 2023 subject to conditions and based on the necessities of various sectors, such as health and tourism. (Newswire)

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The State-Owned Enterprises Restructuring Unit of the Ministry of Finance has provided an update on the divestiture process of shares held by the Government of Sri Lanka in several entities and the measures taken to manage the State Owned Enterprise (SOE) sector. 

Issuing a statement, the Finance Ministry provided a progress update on the divestiture of shares held by the government in Hotel Developers Lanka Ltd (HDL, owners of Hilton Colombo), Canwill Holdings Pvt Ltd (CHPL, owners of Grand Hyatt Colombo), Lanka Hospitals Corporation PLC (LHCP), Sri Lanka Telecom PLC (SLT), SriLankan Airlines Ltd (SLA), Litro Gas Lanka Ltd/Litro Gas Terminals (Pvt) Ltd (together LITRO), Sri Lanka Insurance Corporation Life Limited and Sri Lanka Insurance Corporation General Limited (together SLIC).

The Ministry says as of date, pre-bid meetings have been held for all entities identified for divestiture, adding that in certain instances, at the request of potential bidders with the advice of the Transaction Advisors and with approvals of the Special Project Committees (SPC) and Special Cabinet Appointed Negotiating Committee (SpCANC), the Request for Qualification (RfQ) closing dates were extended to foster greater competition.  

Deadlines for the submission of RfQs for HDL, CHPL, LHCP, SLT, SLIC and LITRO have now closed, while the deadline for SLA remains open until 22nd April 2024. 

It is envisaged that all transactions other than SriLankan Airlines will be concluded by August 2024, while the timeline for SriLankan Airlines is likely to extend to the end of September 2024.  

The Finance Ministry also said that work has been done to set up a structured, efficient and well-governed process to manage the State Owned Enterprise (SOE) sector going forward. 

This is part of the overall reform program of the government and aims to transform SOEs into well-governed, competitive and financially disciplined entities that provide citizens with essential goods and services effectively and efficiently without being a drain on public finances. 

The full statement of the Finance Ministry; 

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A total of 14 Request for Expression of Interest (REOI) have been received from potential investors for the Strategic Divestiture of Litro Gas Lanka Ltd. (LGL) and Litro Gas Terminals (Pvt) Ltd. (LGT). 

According to Sri Lanka’s Finance Ministry, the government had called for REOIs on 16th January 2024, with the deadline for submission of proposals ending at 2 pm today (Mar 15).

The REOIs received were considered by the Opening Committee appointed by the Special Cabinet Appointed Negotiating Committee. 

The Finance Ministry said 14 REOIs were received from the following parties: 

1. Epdesa Pte Ltd, Singapore
2. Bharat Petroleum Cop. Ltd., India
3. Ayaz Anonim Sirketi, Republic of Türkiye
4. SiamGas and Petrochemicals Public Company Limited, Thailand
5. BGN Int DMCC, UAE
6. Confidence Petroleum India Limited, India
7. OQ Trading Limited, UAE
8. Tristar Group, UAE
9. Laugfs Gas PLC, Sri Lanka
10. United Petroleum Holdings, Malaysia
11. Vitol Asia Pte Ltd., Singapore
12. Infinity NGC, Sri Lanka
13. China National Aero Techno, Sri Lanka 
14. Consulting Engineers & Contractors, Sri Lanka

The REOIs will be evaluated by the Special Project Committee as per the Special Guidelines on Divestiture of State-Owned Enterprises approved by the Cabinet of Ministers in July 2023. 

The Finance Ministry added that Deloitte India acts as Transaction Advisor for the Strategic Divestiture of Litro Gas Lanka Ltd. (LGL) and Litro Gas Terminals (Pvt) Ltd. (LGT). (NewsWire)

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Minister of Labour and Foreign Employment Manusha Nanayakkara has slammed Finance Ministry officials, stating that they are acting without any understanding regarding how to protect the fishermen and the fisheries industry.

The minister stressed that, as a result, these officials have not been able to prepare a viable programme to protect fishermen and develop the fisheries sector of Sri Lanka.

Minister Nanayakkara pointed out that the Ministry of Finance officials’ actions indicate they do not have a proper understanding of the valuable contribution made by the fisheries sector to the development of the economy of this country.

The minister stated this during a meeting held at the Ministry of Labour and Foreign Employment today (Jan 17) with those employed in the fisheries sector. 

The meeting was part of a series of such events organized under the “Garu Saru” programme, initiated by the Ministry of Labour and Foreign Employment to uphold the dignity, security and professional status of all those employed in the informal sector of work in Sri Lanka.

As a person who hails from the Galle district, the minister pointed out that he has a good understanding of the fisheries industry and the challenges faced by the professionals who are engaged in the sector.

“In other countries of the world, whether a person is a fisherman, a plumber, a doctor or an engineer, they are entitled to the same privileges. All of them have the same level of respect. In our country, people are divided on party lines, ethnicity and also according to their professions. This is to take various advantages. By doing so, they try to keep the fishermen and the plantation workers at a low social status level and deny them privileges and respect enjoyed by some other professionals.

“But as our main programme, our Ministry started an initiative to ensure that the workforce in the informal sector of this country gets the dignity, security and professional status enjoyed by those engaged in the so-called formal sector of work.

“There are only 2.5 million employees in the country on record. But there are another 6 million who contribute to this economy. You are among those people. But there was no programme to protect this group. That is why we have started this programme to give dignity, security and respect to these 6 million workers. Also, we aim to introduce a proper social security mechanism for these workers to protect them when they are unable to work and when they are old.

We are introducing a new bill to bring an employment act. Thereby, a new chapter will be created and a committee will be created for those in these fields. Then we will take steps to make it a statutory body in this country,” he said.

Minister Nanayakkara further said that the most important thing here is that this is not a workers’ union and that this will be a professional council. 

“Here, as fishermen, you will decide what your industry wants and what is best for your industry. As the minister, I have the power to gazette the regulations that you will decide and agree to.

“The real story is that nowadays anyone can become a fisherman. That means anyone can get a boat and go fishing. But this should go beyond that and it should be done professionally. Therefore, you should propose how to develop this industry at a professional level and I will spearhead efforts to implement them. Our aim is also to prepare a system to take care of those engaged in this sector when they are old or unable to work or when they lose their jobs.

“We gave an undertaking to the Cabinet of Ministers that we will submit a report within three months with proposals to usher in a social security system covering the entire workforce of the country. Through that, we are trying to integrate the various insurance schemes such as agricultural insurance, farmer insurance and various social security funds such as EPF and ETF and have one common system for all the working people. The related proposals are now being prepared by an expert committee. After that, you too can get EPF after 55 years of age. It is also possible to get employee benefit funds like ETF. If you want, you can get it as a pension. This is a national programme,” he said. 

The Labour Minister went on to note that the GPS system that was brought to prevent boats from illegally going to Australia was also installed in boats. 

“To install GPS you have to incur a cost of around Rs.800,000. Also, only one group has been permitted to make them. Fishermen need a GPS. But what has happened here is that they have made it compulsory to install the GPS system given by Australia and not others. And without this, you will not get the license to go to sea. The GPS must be repaired to get this license. Also, the people going to the sea should be insured, and this insurance is done by different companies. But the insurance pays only if the boat breaks and all the lives are lost. There is a lot of confusion here. Often when a life is lost, especially when a person falls into the sea and goes missing, a death certificate cannot be obtained. There are also questions about how to compensate them at such times. When a boat has to be towed, there is a problem in which the insurance company intervenes,” he said.

The minister also said that these are not matters related to his ministry, these are matters related to the Ministry of Fisheries. 

“But we do what is necessary for your safety and dignity. Here, we are working to create your safety as well as professional dignity. Although we have the sea around the country, we bring fish from abroad. Imported fish is taxed only 100 or 200 rupees for a kilogramme and this is also after excluding the water weight. But if we build a factory in the country, the Government imposes an 18% VAT. We are the ones who raised our hands for this. But this has been prepared and sent by the officials of the Ministry of Finance. They do not know how to take care of the fishermen.

“There is a problem that when we do fishing, whether we use the safety tools used by other fishermen in the world? If so, our accidents can be greatly reduced. We present these as laws. Sometimes you may feel we are trying to further burden you. However, as the Ministry of Labour, we are trying to do things that need to be done for the safety of the workers. They are discussed with other institutions and we try to implement them without any conflict,” the minister added. (NewsWire)

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The Ministry of Finance has released a list of the items that will be exempted from Value Added Tax (VAT).

Issuing a statement, the Finance Ministry said 43 items will remain tax-free.

The Value Added Tax at a rate of 18% came into effect from January 01, 2024. 

Following is the list of items that will be exempted from VAT: 

The post Finance Ministry issues list of 43 VAT-free items appeared first on Newswire.

The Ministry of Finance has announced changes that will affect the prices of fuel and LP gas from January next year. 

According to the Tax Policy Advisor of the Ministry of Finance Thanuja Perera, the prices of fuel and LP gas will increase due to the implementation of the Value-Added Tax at 18%.

Perera said, however, that the Finance Ministry has decided to remove the 7.5% Ports and Airports Development Levy (PAL) for fuel and LP gas.

Perera further said the Ports and Airports Development Levy (PAL) for fuel and LP gas will be removed once the VAT comes into effect from January 01, 2024. (NewsWire)

The post Fuel & Gas price from Jan 1st : Clarification from Finance Ministry appeared first on Newswire.

The Ministry of Finance has announced criteria for the payment of bonuses to staff of Commercial Corporations, Statutory Boards, and Government Owned Companies for the year 2023.

Making the announcement, State Minister of Finance Shehan Semasinghe said payment of bonuses to the staff of the said entities should be granted only if the institutions had earned profits during the financial year 2022.

He further said that bonuses can be paid if only the institutions have paid at least 30% of the profit after tax as dividends to the Consolidated Fund. (NewsWire)

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