2024-02-21
The Committee on Public Finance, which previously considered the Value Added Tax (Amendment) Bill that removed all VAT exemptions back in November 2023, inquired as to why the Ministry of Finance hasn’t adopted the recommendations made by the Committee regarding the VAT Amendment Bill. Accordingly, the Committee had recommended to the Ministry of Finance to reconsider VAT exemptions for medical equipment, ambulances, high-protein agro foods for children, and agricultural items, which had not been considered by the Ministry.
The aforementioned discussion took place yesterday (Feb. 20) at the Committee on Public Finance, chaired by Hon. (Dr.) Harsha de Silva.
The Value Added Tax (Amendment) Bill also increased the VAT from 15% to 18% and decreased the threshold for VAT registration from Rs. 80 million to Rs. 60 million per annum, effective from January 1, 2024, aiming to adjust tax rates and registration requirements in line with the government's goal to increase revenue to 14% of GDP in Sri Lanka. Furthermore, the committee questioned officials as to why they keep delaying the implementation of VAT on foreign digital and software providers, creating an unequal playing field for domestic digital and software providers. Even local travel booking agents are subjected to VAT while websites such as Booking.com are exempted. Since it is merely a change in the interpretation of the law, the Committee pressed officials on why they're delaying this, but officials stated that they require a new law, which is set to come into effect in April 2025. The Committee further pushed the officials to find a mechanism to collect due taxes and create an equal playing field until they draft a new VAT bill.
Additionally, the Committee deliberated on the Social Security Contribution Levy (Amendment) Bill. This amendment to the Act, which lowers the turnover threshold of registration for the Social Security Contribution Levy from one hundred and twenty million rupees to sixty million rupees per annum, effective from January 1st, 2024, was approved by the Committee.
The Chairman raised concerns regarding the necessity of maintaining two separate tax structures, citing the inherent inefficiencies and administrative burdens involved. He suggested consolidating these taxes under the Value Added Tax (VAT), which would result in an average effective rate of 22% when combined with the Social Security Contribution Levy. In response, the Ministry of Finance clarified that their objective was to meet revenue targets and that they intend to use this approach until they can transition to a more streamlined tax system that captures all taxpayers more effectively.
Furthermore, the Committee also queried the Officials about the progress of recovering the lost revenue resulting from the initial ‘sugar scam’, as highlighted in the report by the Auditor General. Officials contended that it should not be classified as a tax loss, but rather as tax foregone due to the reduction of the special commodity levy from 50 rupees to 25 cents. Despite this explanation, the Committee pressed the officials for data on certain companies that had disproportionately profited from this tax adjustment, amounting to 1.4 billion rupees from six companies, with an additional six companies yet to be investigated.
Chairman questioned why the Government couldn't recover the remaining foregone tax, especially while imposing significant tax increases such as on PAYE and VAT for the average Sri Lankan. Officials explained that they could only recoup 30% of the unduly gained tax through corporate tax, leaving the remaining 70% uncollectable within the current tax framework. Consequently, members of the COPF urged officials to explore avenues for collecting all foregone tax revenue or propose new legislation to address such situations in the future and prevent their recurrence. While both the VAT (Amendment) bill and the Social Security Contribution Levy were approved by the Committee, the Chairman notably dissented, citing the aforementioned concerns.
Members of Parliament Hon. Rauff Hakeem, Hon. Chandima Weerakkody, Hon. Nimal Lanza, Hon. Mahindananda Aluthgamage, Hon. Duminda Dissanayake, Hon. Harshana Rajakaruna, Hon. Madhura Withanage, Hon. M. W. D. Sahan Pradeep, Hon. (Dr.) Major Pradeep Undugoda, were present at the Committee meeting held.
2026-11-14
The financial crisis faced by SriLankan Airlines, frequent flight delays, debt burden and delays in procurement processes for acquiring new aircraft were discussed extensively at the Sectoral Oversight Committee on Infrastructure and Strategic Development.These matters were discussed when the Committee met recently in Parliament under the chairmanship of Hon. S. M. Marikkar, Member of Parliament.During the meeting, concerns were raised over the inadequacy of the airline’s existing fleet of 23 aircraft, which are approximately 12 years old. Technical issues and operational delays arising from the ageing fleet were also discussed. It was pointed out that a technical fault or any other disruption involving a single aircraft could affect the entire flight network due to the limited availability of alternative aircraft.The Committee also focused on the failure of conventional procurement processes previously undertaken to acquire aircraft and the lengthy delays associated with them. It was stated that a special set of procurement guidelines had been prepared for the purchase of aircraft and related equipment, and arrangements were being made to gazette these guidelines. It was further revealed that a dedicated procurement unit had been established at the Ministry level to directly oversee the procurement process.Under the new procurement guidelines, plans are underway to expand the airline’s fleet. It is expected that one new narrow-body aircraft and two wide-body aircraft will be added to the fleet by next June. Officials also stated that increasing the fleet to at least 29 aircraft by 2029 is one of the key targets of the five-year plan.It was explained that several measures had been taken through the General Treasury to improve the financial position of SriLankan Airlines, including the takeover of outstanding bank loans and bond-related debt. Attention was also drawn to reducing aircraft leasing costs, managing fuel expenditure and implementing commercial strategies to increase the airline’s revenue.The impact of the prevailing crisis in the Middle East, rising fuel prices and competition from international airlines on SriLankan Airlines’ operations and revenue was also discussed.Furthermore, it was stated that the committee appointed by the Government to restructure SriLankan Airlines was considering several options, including attracting new investors, establishing a public-private partnership, or retaining the airline under State ownership while bringing its operations to a level where it could cover its costs.Accordingly, the Committee instructed the relevant authorities to submit a comprehensive report to Parliament and the Ministry before November 30, outlining the measures required to bring SriLankan Airlines to a cost-recovery level within the next two to three years.Hon. Members of Parliament Ajith P. Perera, Nalin Bandara Jayamaha, Ravindra Bandara, Manjula Suweera Arachchi, Chathura Galappaththi, Dhanushka Ranganath, Jagath Vithana, Shantha Padma Kumara Subasinghe and Attorney-at-Law Geetha Herath also attended the Committee meeting.
2026-11-14
The Committee on Ways and Means held an extensive discussion on Sri Lanka’s tariff policies and the current status of trade agreements. The meeting was held under the Chairmanship of Hon. Vijesiri Basnayake, Member of Parliament at Parliament recently.Mr. Somasena Mahadiulwewa, Director General (Acting) of the Department of Commerce of Sri Lanka, provided a detailed explanation to the Committee on these matters. The discussion focused on the current status of Sri Lanka’s bilateral and multilateral trade agreements and measures to move them forward.The Committee stressed the importance of conducting feasibility studies on trade agreements that are currently under negotiation and taking the necessary steps to ensure that these discussions continue.Hon. Deputy Ministers Chathuranga Abeysinghe and Eranga Weeraratne, and Hon. Members of Parliament Ashoka Sapumal Ranwala, Thilina Samarakoon, Champika Hettiarachchi and Chathura Galappaththi, among others, also participated in the Committee meeting.
2026-11-13
The Prevention of Foreign Terrorist Fighters Bill received the approval of the Sectoral Oversight Committee on Economic Development and International Relations.The Bill was considered and approved when the Sectoral Oversight Committee met recently in Parliament under the chairmanship of Hon. Member of Parliament (Attorney-at-Law) Lakmali Hemachandra. The Bill has been presented to give effect to United Nations Security Council Resolution 2178, adopted on 24 September 2014, which addresses the prevention and suppression of the threat posed by foreign terrorist fighters, and to provide for matters connected therewith or incidental thereto.The Bill was presented to Parliament for its First Reading on 20 October by the Minister of Foreign Affairs, Foreign Employment and Tourism.Officials explained to the Committee that legal action could be instituted in Sri Lanka under this Act in cases where an offence has been committed within or outside Sri Lanka by a Sri Lankan citizen or a citizen of another country, provided that the act in question also constitutes an offence under the law of the relevant country.Officials further informed the Committee that engaging in terrorist activities, planning or preparing such activities, participating in them, as well as providing or receiving terrorist training, have been defined as offences under the proposed Act.The officials also emphasized that these legal provisions had not been introduced on an ethnic basis or with the intention of targeting Sri Lankans residing overseas.Following an extensive discussion, the Committee approved the Bill. However, Hon. Member of Parliament Sivagnanam Shritharan, a member of the Committee, expressed his opposition to the Bill.Hon. Members of Parliament Suranga Rathnayake, Thilina Samarakoon, Wijesiri Basnayake and Sivagnanam Shritharan, among others, attended the Committee meeting. Government officials representing the Ministry of Foreign Affairs, Foreign Employment and Tourism, the Ministry of Defence, the Attorney General’s Department and the Legal Draftsman’s Department were also present.
2026-11-13
Salary anomalies arising when teachers are appointed to the Sri Lanka Principals’ Service were discussed at length at a subcommittee appointed by the Sectoral Oversight Committee on Education, Manpower and Human Capital.These matters were discussed when the subcommittee met recently under the chairmanship of Hon. Member of Parliament Sunil Rajapaksa.Representatives of trade unions of the Sri Lanka Principals’ Service and officials representing the Ministry of Education, Higher Education and Vocational Education and the Ministry of Finance, Planning and Economic Development participated in the meeting.Trade union representatives pointed out that one of the main reasons for these salary anomalies was the fact that the transition from the Teachers’ Service to the Principals’ Service was treated as a “new appointment” rather than a promotion.They further noted that the situation was exacerbated by the significant difference in salary increments when teachers in Grade I of the Teachers’ Service are appointed to Grade III of the Principals’ Service.They also pointed out that although an adjustment allowance had been granted to compensate for the salary difference arising from the appointment to the Principals’ Service, a further salary disparity emerges over time. This is because officers do not receive the higher salary increments, they would have been entitled to had they remained in the Teachers’ Service.It was further emphasized that this situation has discouraged senior and experienced teachers serving in Grades I and II-I of the Teachers’ Service from sitting for the Principals’ Service examination and joining the Principals’ Service.The Chairman of the Subcommittee stated that, having considered the matters presented to the Committee, steps would be taken to submit the relevant recommendations to the Salaries and Pensions Commission for Public Officers.In addition, the Subcommittee decided to hold discussions with the Ministry of Education, Higher Education and Vocational Education, the Ministry of Finance, Planning and Economic Development, and the Director General of Establishments to address other issues faced by officers serving in the Principals’ Service.Hon. Members of Parliament Abubakar Athambawa, Sugath Wasantha de Silva and Chanaka Madugoda also attended the meeting.
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