Regulatory & Policy News
View all(62)🚨 US Slaps 10-12.5% Tariffs on 60 Trading Partners Over Forced Labour Concerns
• Overall Impact: The US Trade Department has announced new import tariffs of 10% to 12.5% targeting 60 trading partners. These nations collectively account for 99.4% of all US imports, virtually encompassing almost all goods sold to the US. • The Cause: The penalties follow a March investigation concluding that all 60 partners failed to legally prohibit or effectively block the import of goods produced via forced labour, which US officials state creates an unlevel playing field for American workers. • Affected Regions: The extensive list of 60 trading partners includes major global economies and key regional markets such as India, the UK, the EU, Canada, and Japan. • Context & Precedent: This marks the Trump administration's second major tariff rollout since the US Supreme Court struck down its previous April 2025 'Liberation Day' duties in February. A separate 10% temporary global tariff enacted after that ruling is currently set to expire in July, unless Congress extends it.
📈 Ending Plantation Crop Bias: A Call for Diversification
An analysis of Sri Lanka's plantation sector urges policymakers and academics to adopt an evidence-based approach, moving away from crop rivalry to view palm oil, rubber, and coconut as complementary pillars for economic stability and food security. • Palm Oil vs. Coconut Yields & Sustainability Both crops belong to the same palm family, but palm oil produces significantly higher edible oil yields per hectare than coconut. Palm oil features a larger leaf area index, allowing it to absorb more carbon dioxide and aid climate mitigation. Coconut remains vital for traditional diets, while palm oil is positioned as crucial for meeting domestic edible oil demand and saving foreign exchange on imports. • Rubber Sector Realities Decline in rubber cultivation and yields in wet-zone regions is driven by climate constraints—specifically frequent rainfall reducing tapping days—rather than biological weakness. Large estates and smallholders show reluctance to replant due to these persistently poor climate-driven harvests. Rubber remains indispensable for global industrial supply chains (e.g., automotive tires, medical equipment). • Debunking the Monocrop Myth Critics label palm oil as a restrictive monocrop, yet almost all rubber estates in Sri Lanka operate as monocorps. With proper management and planning for its dense canopy, intercropping is achievable in palm oil systems. • Policy & Land Use Outlook The analysis calls for strategic, balanced land-use planning that leverages the specific ecological strengths of each crop to maximize productivity and sustainability.
⚠️ SEC Issues Urgent Investor Warning Against Fraudulent Firm "Samagi Capital"
The Securities and Exchange Commission of Sri Lanka (SEC) has issued an urgent public notice warning investors against doing business with Samagi Capital (Private) Limited. • The Fraud: A fake Broker Dealer License certificate is currently circulating on social media. The SEC explicitly states this document is fraudulent, misleading, and was never issued by their office. • Licensing Status: The regulator confirms that Samagi Capital is not licensed to operate as a stockbroker or stock dealer in Sri Lanka. • Investor Action: The general public is strongly advised not to deposit any funds into accounts linked with this firm for trading on the Colombo Stock Exchange (CSE). Safety Precautions Recommended by the SEC: • Always verify licenses directly via the official SEC or CSE websites before investing. • Execute financial transactions exclusively through stockbroker firms holding a valid SEC license. • Conduct thorough due diligence to protect capital and prevent falling victim to financial scams.
🚨 Sri Lanka Customs Seizes Illicit Cigarettes Worth Rs. 31 Million at BIA
Provisional details from Sri Lanka Customs report a major contraband interception at the Bandaranaike International Airport (BIA). • Overall Seizure: Smuggled cigarettes valued at Rs. 31 million were confiscated by customs officers at the airport's Green Channel Arrival area. • Timeline & Suspects: The operations took place over a two-day period on 29 and 30 May 2026. A total of 18 passengers were intercepted, comprising 16 foreign nationals and 2 Sri Lankan nationals. • Economic Impact: While further investigation details are pending, such operations are critical for curbing revenue leakages from unpaid excise duties and protecting national border security.
## Govt. Launches Digital Network to Modernise Public Services 📈
The Government has initiated a new digital network programme aimed at enhancing the efficiency and quality of public sector operations. • Objective: To modernise public services as a key component of the national Digital Economy Plan. • Implementation: An awareness programme was conducted for coordinating executive officers of public institutions at the Information and Communication Technology Agency (ICTA) on May 27. • Focus Area: The initiative prioritises the integration of digital infrastructure within public institutions to streamline administrative workflows and improve service delivery for the general public. This move marks a significant step in the broader effort to digitise the nation’s governance framework and foster a more efficient public sector environment.
📈 FTZMA Urges BOI to Address 18% VAT Burden & Operational Concerns
The Free Trade Zone Manufacturers Association (FTZMA) held a constructive meeting with Acting BOI Chairman Dr. Sulakshana Jayawardena and Director General Renuka Weerakoon to address critical policy and operational issues impacting export-oriented manufacturers. Key Highlights: • Taxation & Competitiveness: FTZMA raised major concerns over the 18% VAT imposed on raw material purchases from local and indirect suppliers. They stressed that this creates an unfair cash-flow burden, weakens export competitiveness, and increases net foreign exchange outflows, urging for practical VAT exemptions or zero-rating mechanisms. • Customs Functions Update: It was confirmed that Sri Lanka Customs will not take over the Import/Export Services currently handled by the BOI. The existing BOI-led process will be maintained, supplemented by new verification officers and a non-disruptive back-office monitoring mechanism by Customs. • Energy & Infrastructure: Discussions covered the proposed establishment of two fuel sheds in the Katunayake (KEPZ) and Biyagama (BEPZ) export processing zones. FTZMA also highlighted the disparity in industrial diesel pricing between CPC and LIOC, with plans to engage further with the Power and Energy Ministry. • BOI Capacity: To address administrative delays, the BOI confirmed that recruitment is underway for a new Executive Director - Zones, vacant Zone Director positions, and over 100 departmental vacancies.
📜 NCE Urges Fixed Timeline as Sri Lanka’s Madrid Protocol Accession Moves to Legislative Phase
The National Chamber of Exporters (NCE) is pushing for a definitive roadmap as Sri Lanka finalises statutory amendments to join the Madrid Protocol, a streamlined international trademark system used by over 100 economies (68% globally). • Current Status: The process is in the legislative phase with the Legal Draftsman's Department finalising amendments. NIPO previously agreed to a 6-to-9-month implementation timeframe, and NCE is demanding a tentative timeline to help exporters plan international branding strategies. • Economic & Sectoral Impact: Accession will directly protect expanding Sri Lankan brands, moving local companies from raw suppliers to global brand owners. Key affected sectors include tea, apparel & textiles, spices (like Ceylon Cinnamon), gems & jewellery, processed foods, and ICT/BPM (software platforms). • Cost & Efficiency Breakdown: • Individual filings are highly expensive (e.g., US$ 350/class in the US, US$ 356 in Canada, vs. US$ 39 in China). A 2003 comparison showed registering across 11 countries individually cost US$ 14,600, compared to just US$ 5,800 via the Protocol. • The Madrid Protocol offers a single application through Sri Lanka's IP office in Swiss francs. Base fees are ~US$ 827 (black-and-white) or ~US$ 1,143 (colour), plus ~US$ 127 per member country/class. • Strategic Value: Joining removes heavy administrative and financial burdens for SMEs, who often skip registration due to high costs. It also signals modern IP standards to foreign investors, attracting franchise, tech, and manufacturing partnerships. Remaining outside the system leaves Sri Lanka at a structural disadvantage against Asian competitors.
🚨 15 Sectors Declared Essential Services Amid Post-Disaster Relief
President Anura Kumara Dissanayake has officially declared 15 categories of public services as essential under the Essential Public Services Act, No. 61 of 1979. Issued via an Extraordinary Gazette on May 28, the directive aims to guarantee the uninterrupted functioning of critical state institutions and public life during ongoing post-disaster recovery efforts across Sri Lanka. • Core Infrastructure & Utilities: Covers the supply of electricity, fuel and gas distribution, water supply, drainage, and waste management/sanitation services handled by local authorities. • Transport & Logistics: Encompasses public transport, road and railway networks, alongside vital international gateways including airport and port operations. • Healthcare & Emergency: Secures continuous operations for hospitals, medical care facilities, and emergency ambulance services. • Public Administration & Welfare: Brings key field-level officers—including District and Divisional Secretariats, Grama Niladharis, Samurdhi officers, and agricultural research assistants—under the essential services mandate to streamline emergency response. • Finance & Communication: Ensures stability in State banking and insurance services, telecommunications, and media operations. • Agriculture & Supply Chains: Mandates uninterrupted food and essential goods distribution, irrigation services, land reclamation, and agricultural services (including crop insurance). _Note: This framework enforces legal continuity across departments, corporations, and cooperative societies to preserve economic stability and public welfare during the crisis._
Tax Update: EY Highlights Changes to VAT Risk-Based Refund System 📈
The Inland Revenue Department (IRD) has issued revised guidelines (Gazette Extraordinary No. 2481/17) updating taxpayer risk classifications under the VAT Risk-Based Refund Scheme. These rules replace the September 2025 guidelines and apply retrospectively from 1 October 2025. • Overall Mechanism: The scheme allows key economic drivers, particularly exporters, to receive VAT refunds within 45 days prior to a full audit, following a preliminary IRD review. • New Classification Criteria: Taxpayers are categorized into low-, medium-, or high-risk profiles based on 5 years of historical data. Key factors include: • Tax compliance, filing accuracy, and timely payments. • Refund history and previous tax audit findings. • Operational performance stability and third-party data verification. • Business duration. • Impact on Businesses: • Low and medium-risk taxpayers undergo a basic review, speeding up cash flows for sectors like apparel & textiles and tea that rely heavily on export refunds. • High-risk taxpayers face a strict pre-audit, which EY notes could delay refunds beyond the 45-day window. • Due to heavy emphasis on past audit outcomes, a larger number of taxpayers may now be classified as high-risk.
📈 Cabinet Clears New Rules to Regulate Foreign Remittance Service Providers
The Cabinet of Ministers has approved revised regulations under the Payment and Settlement Systems Act, No. 28 of 2005 to strengthen oversight on money and value transfer services, alignment with international Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) standards, and enhance formal foreign exchange inflows. • Core Changes: The newly approved _Money or Value Transfer Service Providers Regulations No. 1 of 2025_ (Gazetted Dec 23, 2025) replaces the 2024 framework. It explicitly allows foreign money or value transfer service providers to formally register in Sri Lanka. • Closing Regulatory Gaps: Previously, registration was restricted to locally incorporated companies. This excluded offshore and foreign-registered firms, many of which continued operating through local agents without official registration. • Economic Impact & Oversight: The Central Bank of Sri Lanka will formally supervise all operators. The framework aims to secure cross-border payment flows, bring informal operators into the official network, and boost worker remittances, which remain a vital pillar for national external economic stability and employment support. • Context: The proposal was tabled by President Anura Kumara Dissanayake in his capacity as the Minister of Finance, Planning and Economic Development.
🤖 SASSRI Hosts Landmark Forum on Drones, AI, and Sri Lankan National Defence
• Strategic Overview: The South Asia Sustainability & Security Research Institute (SASSRI) concluded a high-level panel discussion in Colombo focusing on "Drones, Deterrence, and Defence." The forum addressed how small states like Sri Lanka can navigate geopolitical competition, artificial intelligence (AI), and technological disruption. • Key Focus Areas: Drones & UAVs: Explored the expanding role of Unmanned Aerial Vehicles (UAVs) in maritime surveillance, border management, intelligence gathering, and protecting critical national infrastructure. Cybersecurity & AI: Highlighted the critical convergence of national security and digital infrastructure protection, emphasizing the need for robust cyber resilience against hybrid warfare. Policy & Governance: Emphasized developing indigenous ICT/technological capabilities and creating updated regulatory and ethical frameworks to balance innovation with security. • Stakeholder Collaboration: The event brought together officials from the Ministry of Defence, Ministry of Foreign Affairs, Civil Aviation Authority, Tri-Forces, Police, and private sector technology leaders. Panelists included experts from CLASS, EGUARDIAN, Rabdan Academy, and veteran Sri Lankan UAV operators, who concluded that safeguarding sovereignty requires a unified, whole-of-government approach and deeper regional cooperation.
📜 Sri Lanka's Taxpayer Charter: A Foundation for Trust & Compliance
The Inland Revenue Department (IRD) highlights the significance of Sri Lanka’s Taxpayer Charter (published in 2023) as a crucial social contract aimed at boosting voluntary compliance, transparency, and domestic revenue mobilization. • Core Framework & Taxpayer Rights The charter outlines nine fundamental rights for taxpayers to ensure professionalism and dignity. These include the right to fair treatment, professional service, privacy, redress for grievances, and clear reasons for tax decisions. • Taxpayer Obligations To balance these rights, the charter enforces four key obligations: providing accurate information, maintaining proper records, filing returns and payments on time, and cooperating honestly with tax authorities. • Economic Impact & Business Certainty By establishing predictable procedures, the framework reduces administrative friction and fosters a stable environment. This clarity is vital for small and medium enterprises (SMEs) to plan finances, reassures salaried taxpayers, and enhances investor confidence in Sri Lanka's macroeconomic climate. • Modernization & National Development As Sri Lanka drives digital transformation in tax administration (via e-filing and digital payments), the charter ensures systems remain fair and accessible. Sustainable revenue mobilization directly funds critical public services like healthcare, education, and infrastructure, moving the nation away from confrontational enforcement toward civic partnership.