Regulatory & Policy News
View all(80)Govt Launches 'V-Pramithi' Initiative for Consumer Safety 🛡️
• Overview: The Ministry of Science and Technology launched the national "V-Pramithi" programme to ensure strict quality standards and safety for consumer goods sold in Sri Lanka. • Implementation: Launched at Pettah Public Market under the "Clean Sri Lanka" initiative and National Integrity Week. Officials collected random samples for laboratory testing to detect harmful substances, toxins, and heavy metals. • Sector Impact: Focuses on testing key items across the food & beverage (street food, coconut oil, jaggery, treacle, spices), cosmetics, and electrical appliances sectors. • Key Partners: Technical support is provided by the Sri Lanka Standards Institution (SLSI), Industrial Technology Institute (ITI), and Sri Lanka Atomic Energy Board, in coordination with the Ministry of Health, Consumer Affairs Authority, and Sri Lanka Police. • Objective: Aims to protect consumer health, raise market hygiene standards, and encourage local manufacturing and trading compliance with safety benchmarks.
🇱🇰 Sri Lanka Launches WHO-Backed Alcohol Control Initiative
• Overview: Sri Lanka has officially introduced the Investment Case on Alcohol Control alongside the World Health Organization’s (WHO) SAFER Technical Package aimed at mitigating the health, social, and economic burdens of alcohol consumption. • Economic & Health Focus: The initiative targets the heavy economic costs associated with alcohol-related harms—including healthcare expenditure and lost labor productivity—supporting long-term national health and fiscal sustainability. • Key Strategy: Implementation of the WHO SAFER technical guidelines focuses on high-impact strategies such as strengthening alcohol availability restrictions, enforcing drink-driving counter-measures, and advancing pricing and tax policies.
⚖️ Government Proposal to Extend Superior Court Judicial Retirement Ages Sparks Governance Debate
A proposed constitutional amendment to raise the retirement age of Supreme Court and Court of Appeal judges has drawn widespread concern from the Bar Association of Sri Lanka (BASL), Judicial Service Association (JSA), and legal experts regarding judicial independence and public trust. • Government Rationale & Objectives: Aims to mitigate case backlogs and maintain experienced leadership in the higher judiciary. Part of broader efforts to resolve systemic court delays that increase operational costs for citizens and businesses. • Legal & Constitutional Concerns: BASL and commentators argue extending the tenure of serving judges creates perceived governmental influence and potential conflicts of interest. The 20th Amendment already expanded judge capacity; experts note existing judicial vacancies remain unfilled, questioning operational necessity. International norms (e.g., ELI-Mount Scopus Standards) emphasize that changes affecting judicial tenure should apply prospectively and undergo broad stakeholder consultation. • Recommended Next Steps: Legal bodies urge establishing an independent committee (Judiciary, Justice Ministry, BASL, civil society) to review structural reforms, prospective application, and genuine operational needs to safeguard democratic governance.
🏛️ British Council Sri Lanka Transfers Vocational Attestation to TVEC
• Overview & Legal Compliance Effective 1 August 2026, attestation for vocational and technical education qualifications will transfer from British Council Sri Lanka to the Tertiary and Vocational Education Commission (TVEC). The change ensures compliance with the Tertiary and Vocational Education Act No. 20 of 1990, recognizing TVEC as the primary statutory body for Sri Lanka's tertiary regulatory standards. • Key Operational Changes TVEC Scope: TVEC will handle all future attestations for vocational and technical courses, including those tied to UK awarding bodies. Transition Window: British Council will process all applications submitted on or before 31 July 2026. Retained Services: British Council will retain attestation for UK university degrees, graduate diplomas, Cambridge International, Pearson Edexcel, Oxford AQA (O/A Levels), IELTS, Aptis, and ACCA qualifications. • Impact on Education & Workforce Regulatory Integrity: Mandates that institutions offering vocational qualifications register with TVEC to preserve local and global qualification standards. International Recognition: Collaboration with the UK Department for Business and Trade ensures UK vocational pathways remain trusted and aligned with Sri Lankan law.
📈 Sri Lanka Cabinet Approves Legal Framework to Regulate Crypto & Virtual Assets
• Overview: The Cabinet has approved steps to introduce legislation regulating Virtual Asset Service Providers (VASPs), bringing cryptocurrency and digital asset activities under a formal legal regime. • Regulatory Structure: The Securities and Exchange Commission of Sri Lanka (SEC) will be designated as the primary regulatory authority for VASPs, operating alongside the Central Bank of Sri Lanka (CBSL), Financial Intelligence Unit (FIU), and Inland Revenue Department (IRD). • Driver & Objectives: Addresses regulatory gaps from Sri Lankans using offshore crypto platforms and peer-to-peer exchanges. The move aims to mitigate risks surrounding financial crimes, money laundering, and terrorist financing. • Governance: Proposal submitted by President Anura Kumara Dissanayake (Digital Economy) based on recommendations from a VASP sub-committee under the AML/CFT policy guidance.
Sri Lanka Apparel Sector Urged to Act as New EU GSP+ Rules Loom 📈
• Key Sector Impact: Apparel & textiles is Sri Lanka’s largest export earner, generating over $5 Bn annually, employing 350,000+ workers, and contributing 40–45% of total exports and 6–7% of GDP. • New EU GSP+ Scheme (2027): The EU adopted revised rules on May 22, 2026, introducing stricter requirements on disability rights, labor standards, environment, and governance. Sri Lanka must formally reapply in 2027 with a credible, evidence-based action plan. Current benefits expire at end-2028. • Key Operational & Economic Risks: • Low Utilisation: Only 49%–59% of eligible exports use GSP+ due to restrictive EU rules-of-origin requiring yarn-stage domestic fabric. • Upper-Middle-Income Risk: World Bank reclassified Sri Lanka to Upper-Middle-Income (GNI $4,670) in July 2026. Maintaining UMI status for 3 consecutive years leads to GSP+ exclusion, making early 2027 reapplication critical to avoid MFN tariffs by mid-2029. • Priority Actions Needed: • Legislative & Reform: Repeal/replace PTA to meet international standards; strengthen human rights, labor, climate, and anti-illicit controls. • Industry Upgrades: Invest in domestic fabric manufacturing, secure regional cumulation agreements, and negotiate rules-of-origin flexibility with the EU.
📈 Sri Lanka Pursues Accession to RCEP Trade Bloc
• Strategic Scale: RCEP encompasses 15 member countries (10 ASEAN nations + Australia, China, Japan, South Korea, New Zealand), representing ~30% of global GDP, 29% of global trade, and 2.3 Bn consumers. • Export Diversification: Over 60% of Sri Lanka's merchandise exports are concentrated in the US, EU, UK, and India. Accession offers access to faster-growing regional markets to mitigate external risks. • Sectoral Impact: Preferential access and integration into regional value chains will benefit manufacturing, agriculture, services, and technology-based industries, while boosting long-term FDI. • Key Challenges: Requires aligning Sri Lanka's higher tariff and para-tariff structures, boosting institutional negotiating capacity, and supporting vulnerable domestic industries during liberalisation. • Current Progress: Sri Lanka submitted its formal Letter of Intent in June 2023, with recent encouraging signals from founding members Australia and New Zealand.
⚖️ Sri Lanka Enforces Tougher Tax Compliance and Criminal Penalties Under New Legislation
• Criminal Prosecution Framework: Enactment of Inland Revenue Amendment Act No. 11 of 2026 and VAT Amendment Act No. 14 of 2026 allows prosecution for failing to obtain a TIN, file income tax returns, or attend IRD statutory hearings. Non-compliance can lead to fines up to Rs. 400,000 and 6 months imprisonment. • Expedited Tax Default Recovery: Unpaid taxes can now be directly recovered through Magistrate’s Court proceedings as Court-imposed fines once the assessment is finalized. • 12-Year VAT Limitation Period: Criminal prosecution for VAT offenses can now be initiated up to 12 years from the date of default, significantly extending liability exposure during audits or disputes. • Forty-Fold Penalty Increase: Penalties for tax offenses committed on or after 1 October 2025 have jumped forty-fold—from Rs. 25,000 to a fine of up to Rs. 1,000,000, along with potential imprisonment. • Invoicing, Customs & Refund Fraud: Failure to issue valid tax invoices or customs declarations, as well as submitting false VAT refund claims, are now explicit criminal offenses subject to fines up to Rs. 1,000,000. • Digital Services Rules: Registered non-resident digital service providers face administrative penalties of up to Rs. 50,000 for failing to submit required supply statements.
📈 CDS Extends Mandatory Account Update Deadline to Sept 25
The Central Depository Systems (CDS), a subsidiary of the Colombo Stock Exchange, has extended the deadline for suspending non-compliant investor accounts from July 31, 2026, to September 25, 2026. Key details of the circular include: • Reason for Extension: Granted after market intermediaries requested more time to complete client record updates during a Broker CEO Meeting on July 15. • Objective: Aimed at ensuring accurate records, improving communication, and meeting regulatory objectives to safeguard the integrity of Sri Lanka's capital market. • Action Required: Investors missing mandatory details must submit a completed CDS Form 28 through their respective stockbroker firms to avoid account suspension. • Final Warning: CDS confirmed this is a final extension. Accounts lacking mandatory information will face suspension immediately after the September 25 deadline.
📈 Minister Directs Faster Food Import Customs Clearance
• Core Directive: Trade, Commerce, Food Security and Cooperative Development Minister Wasantha Samarasinghe has ordered officials to expedite customs clearance procedures for food imports. • Objective: The initiative aims to minimize procedural delays and reduce overall import costs for essential food supplies.
📈 Sri Lanka Yet to Register Ceylon Tea for Geographical Indication (GI) Protection: NIPO
• Key Status: The National Intellectual Property Office (NIPO) revealed that the Sri Lanka Tea Board has yet to submit an application to register Ceylon Tea for GI status, despite the country's 159-year tea heritage. • Current GI Coverage: Ceylon Cinnamon remains Sri Lanka's only product with official GI certification (granted by the EU in Feb 2022). Iconic items like Ceylon Sapphire and other unique gemstones still lack GI protection. • Collective IP Rights: NIPO emphasized that GIs are collective rights belonging to producer communities—not individual companies—requiring industry-wide unity and consensus to initiate registration. • Policy & International Strategy: Sri Lanka is working toward joining the Lisbon Agreement to secure international recognition and protection for local GIs in overseas markets. • Macro Export Targets: Strengthening GIs aligns with national goals under the National Export Development Plan (2026–2030), which targets $ 36 Bn in total exports ($ 28 Bn merchandise, $ 8 Bn+ services) by 2030.
📈 Customs to Auction Over 1,000 Uncleared Vehicles at Hambantota Port
• Key Action: Sri Lanka Customs is preparing to dispose of approximately 1,025 imported vehicles stranded at Hambantota Port via public auction or tender under Section 129 of the Customs Ordinance. • Duration & Compliance: About 625 vehicles have remained uncleared for over six months. Official Spokesman Chandana Punchihewa confirmed the vehicles carry no customs violations; disposal is required as importers failed to complete clearance within the statutory one-month limit post duty/tax payment. • Financial Recovery: Revenue generated will first settle outstanding government taxes, with remaining funds allocated toward port and warehouse fees. Any excess balance thereafter will be returned to the importers. • Appeals: Customs will consider written requests and valid justifications for clearance delays on an individual, case-by-case basis.