Regulatory & Policy News
View all(97)### 📈 Excise Department Reaches Consensus on Digitalisation and Modernisation
All trade unions within the Excise Department have officially agreed to a comprehensive digitalisation and modernisation programme aimed at boosting national revenue collection. The consensus follows high-level discussions at the Presidential Secretariat to streamline operations and enhance transparency. • Revenue & Efficiency: The primary objective is to increase excise revenue collection by improving departmental efficiency through technology. This includes implementing new reforms and a robust digitalisation process. • Modernisation Initiatives: The programme focuses on the Revenue Administration Reform and Modernization Bureau’s proposals to transition from manual to digital systems, addressing longstanding gaps in tax collection. • Officer Welfare: Beyond technology, the plan incorporates human resource development and the welfare of officers to ensure smooth implementation and long-term sustainability. • Stakeholder Alignment: The agreement involves the Director General of Excise, Mr. M. B. N. A. Premarathne, and representatives from all trade unions, signaling a unified approach to fiscal reform. _Status: Based on official reports from the Presidential Secretariat._ ---
🚨 Probe Launched Into Ambuluwawa Cable Car Project
The Ministry of Environment has initiated a formal investigation into alleged irregularities surrounding the proposed cable car project at the Ambuluwawa Biodiversity Complex, following a joint inspection led by Minister Dr. Dammika Patabendi. Construction remains suspended pending a final decision. • Key Irregularities: Preliminary findings suggest violations of the National Environmental Act, including the failure to publish mandatory Gazettes or newspaper notifications during the approval process. Allegations surfaced that a full Environmental Impact Assessment (EIA) was bypassed in favor of a basic study, despite the area's ecological sensitivity. • Land & Legal Disputes: The Department of Wildlife Conservation reported unauthorized construction on its lands. A complaint has been filed with the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) against the Central Environmental Authority (CEA) for alleged procedural bypasses. • Environmental Impact: The site hosts 428 species, including 69 endemic and 58 nationally threatened species. Concerns were heightened following environmental damage reported after Cyclone Ditwah. • Next Steps: An expert committee will be appointed to review technical concerns and legal compliance before determining the project's future. 📈
Customs Union Meeting Disrupts Port Operations 📈
Private sector stakeholders have raised concerns over a sudden halt in cargo clearance yesterday, as officers at Sri Lanka Customs suspended work to attend a union meeting. • Overall Impact: Import and export operations effectively came to a standstill starting around 1:00 p.m. While Colombo-based officers attended the meeting, outstation staff reportedly awaited instructions, causing a localized paralysis of trade logistics. • Operational Update: A Customs spokesperson confirmed a two-hour afternoon meeting but stated that duties resumed shortly after. The specific agenda of the union meeting remains undisclosed by the administration. • Industry Concerns: The private sector warned that even brief stoppages trigger a "domino effect," resulting in: • Increased demurrage and terminal charges. • Disruption of tightly scheduled supply chains. • Delays for time-sensitive shipments, affecting the apparel & textiles and perishable sectors. The incident underscores the continued vulnerability of Sri Lanka’s external trade to internal administrative disruptions, despite ongoing efforts to enhance border agency predictability.
### 📈 Advocata Urges Permanent End to Vehicle Permit "Privilege Culture"
The Advocata Institute has strongly cautioned the government against reviving vehicle import permits, warns that exempting high-ranking officials threatens reform credibility and public trust. • Current Status: Despite a broader import ban affecting ordinary citizens, 1,900 permits have been issued to senior officials under concessional schemes, with 563 permits issued in 2025 alone. • Budget 2026 Commitment: President Anura Kumara Dissanayake declared an end to the "permit culture" during the 2026 Budget, yet recent discussions regarding retired officials suggest potential reversals. • Fiscal Impact: Duty-free permits represent significant revenue loss. Historical data shows tax waivers per MP have ranged from Rs. 66 million to Rs. 98.5 million in today’s terms. • The "Privilege" Gap: While officials seek exemptions, the general public faces some of the world's highest effective taxes on personal transport vehicles, with duties ranging from 125% to 250%. • Recommendations: • Abandon all plans to allow imports under existing duty-free permits. • Replace discretionary perks with transparent, on-budget salary structures. • Legislate a permanent prohibition to prevent future policy reversals. Based on provisional parliamentary statements and 2026 Budget proposals.
Sri Lanka Approves 5-Year Renewable Energy Roadmap 📈
The Cabinet of Ministers has officially cleared the Renewable Energy Resources Development Plan 2025–2030. This strategic framework is designed to transition the national grid toward sustainable sources, ensuring energy security and long-term climate resilience. • Core Targets: Aiming to meet 70% of national electricity demand via renewable energy by 2030, with a long-term goal of total carbon neutrality by 2050. • Strategic Focus: Identifying and prioritizing suitable land for green projects and establishing a comprehensive Renewable Energy Map and Renewable Energy Gardens across the island. • Diversification: Key emphasis on developing floating solar projects to optimize land use and expanding the solar and wind energy footprint. • Implementation: Prepared by the Sri Lanka Sustainable Energy Authority (SLSEA), the plan sets a clear timeframe for energy park development and addresses environmental concerns, including human-elephant conflict, through stakeholder consultations. • Economic Impact: Aims to reduce heavy reliance on expensive fossil fuel imports, aligning with the national shift toward a green economy to support industrial stability and ICT/BPM sector growth. _Note: Plan based on statutory requirements of the SLSEA Act No. 35 of 2007._
📈 HRCSL Warns of Threats to Freedom of Expression
The Human Rights Commission of Sri Lanka (HRCSL) has expressed deep concern over emerging threats to freedom of expression, specifically targeting the ability of journalists to report on matters of public interest without interference. • Misuse of Police Powers: The Commission highlighted a growing trend of law enforcement investigating allegedly defamatory speech, despite defamation being decriminalized in Sri Lanka since 2002. Police have no legal authority to investigate complaints that fall strictly under civil jurisdiction. • Procedural Violations: A recent inquiry into journalist Tharindu Jayawardena—regarding reporting on corruption and public funds—violated a 2025 IGP circular. The directive requires officers to clearly disclose the basis for any summons, which was not done in this instance. • Online Safety Act (OSA) Concerns: The HRCSL raised serious questions regarding the constitutionality of the Online Safety Act. It warned that the law is being deployed to suppress dissent rather than addressing genuine online harms like phishing or malware. • Constitutional Standards: The Commission reiterated that freedom of expression protects speech even if it "shocks or disturbs" the State. It reminded public figures that international standards require them to tolerate a higher degree of criticism than private citizens. • Recommendations: The HRCSL called for a moratorium on the Online Safety Act and urged authorities to stop using criminal processes for civil defamation matters to prevent public frustration and social unrest.
IRCSL Extends Sanasa Life Insurance Suspension to March 2026 📈
The Insurance Regulatory Commission of Sri Lanka (IRCSL) has extended the temporary suspension of Sanasa Life Insurance Co. PLC until 3 March 2026. The move restricts the company from issuing new long-term insurance policies while it addresses regulatory concerns. • Regulatory Timeline: Initial suspension began on 5 December 2025. The latest extension follows a previous deadline of 31 January 2026. Registration remains suspended under Section 18 of the Regulation of Insurance Industry Act. • Key Reasons for Action: The regulator cited the company's inability to meet the required solvency margin. Issues regarding the provision of inaccurate data and non-compliance with regulatory orders. Action taken to protect the interests of policyholders and the national financial services sector. • Company Financials & Ownership: Net Asset per share: Rs. 22.61 (as of Sept 2025). Top Shareholders: Senthilverl Holdings (19.10%) and Sanasa Federation (10.50%). The company must still fulfill obligations to existing policyholders despite the freeze on new business.
### 📉 MSMEs Call for Relief Amid Record Bank Profits & Tax Gains
The Ceylon Federation of MSMEs highlights a stark disparity where the banking sector and the Treasury thrived while small businesses collapsed due to high interest rates. • The Interest Shock: In April 2022, policy rates surged by 100%, pushing the Average Weighted Prime Lending Rate (AWPLR) from ~10% to nearly 30% by December 2022. This tripling of costs led to widespread defaults. • Windfall Gains (2023/2024): • Banking Sector Profit Before Tax (PBT): Rs. 762 Billion. • Government Tax Revenue from Banks: Rs. 295 Billion. • The Federation argues these gains were effectively "transferred" from struggling entrepreneurs. • The 'Moratorium Trap': Lack of clear CBSL guidelines on interest capitalization allowed banks to reschedule loans to their advantage, often compounding interest opaquely while using Parate Execution threats. • Proposed Relief Roadmap: • Refund excess interest collected (May 2022 – Nov 2024) for older loans. • Use the Rs. 295 Billion in tax revenue to provide tax credits to banks for these refunds. • Immediate suspension of CRIB and NPL listings for post-Easter attack victims. • Enact binding legislation to ensure mandatory borrower protection. The Federation maintains that the liquidity to save the MSME sector exists within these record-breaking figures.
### 📈 Tiger Global Ruling: Tightening the Net on Tax Avoidance
A landmark January 2026 Indian Supreme Court ruling in Tiger Global v. AAR signals a major shift toward "substance over form," carrying significant implications for cross-border investments and Sri Lanka’s own tax landscape. • The Ruling Highlights The Court denied tax treaty benefits to Mauritius-based entities for the indirect sale of Flipkart shares. Key takeaways include: TRC Limitations: A Tax Residency Certificate is no longer "conclusive proof" of treaty entitlement if the entity lacks commercial substance. Substance Over Form: Authorities can "look through" structures. In this case, control was found to be in the US, not Mauritius. GAAR Supremacy: General Anti-Avoidance Rules (GAAR) can override tax treaties in cases of "impermissible avoidance arrangements." • Comparison: Vodafone vs. Tiger Global Vodafone (2012): Favored taxpayers, emphasizing literal interpretation and legal form. Tiger Global (2026): Favors tax authorities, prioritizing economic reality and value creation over "paper situs." • Implications for Sri Lanka Section 35 (IRA): Sri Lanka’s Inland Revenue Act contains similar GAAR provisions, empowering the Commissioner General to disregard "artificial or fictitious" schemes. Indirect Transfers: Under local law, shares in non-resident companies are deemed "domestic assets" if >50% of their value derives from land or buildings in Sri Lanka. Precedent: The ruling may embolden Sri Lankan authorities to more aggressively scrutinize multi-tiered offshore structures used for ICT/BPM or real estate investments. _Note: Analysis based on provisional January 2026 judicial data._ ---
Govt. Considering Vehicle Imports for Retired Officials 🚗
The Government is currently discussing the possibility of allowing vehicle imports for high-ranking officials who hold valid concessionary vehicle permits. Economic Development Deputy Minister Nishantha Jayaweera confirmed the move in Parliament yesterday. • Current Status: The vehicle permit scheme for retired senior officials remains active and has not been suspended. • Permit Statistics: A total of 1,900 permits have been issued under this scheme to date, with 563 permits granted during 2025. • Key Developments: Discussions are focused on facilitating imports specifically for those who already hold permits, potentially on a priority basis. • Economic Context: This move addresses long-standing restrictions on vehicle imports while balancing the requirements of senior government administration and retired civil servants. _Note: Based on official parliamentary statements._ ---
📈 President Takes Direct Oversight of AML/CFT Review to Avert Grey-List Risks
President Anura Kumara Dissanayake has intervened to personally oversee Sri Lanka’s Third Mutual Evaluation on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT), signaling high-level political ownership to protect the nation’s financial integrity. • The Risks: Failure to meet Financial Action Task Force (FATF) standards risks returning Sri Lanka to the "grey list". This could deter foreign investment, increase compliance costs, and disrupt vital cross-border financial transactions. • Strategic Context: The evaluation, overseen by the Asia/Pacific Group (APG), assesses technical compliance with 40 FATF recommendations and effectiveness across 11 outcomes. Previous lapses led to grey-listing in 2017, which the current administration aims to avoid through "good governance and accountability." • Key Directives: • Legislation: Expedite all pending technical amendments and legal reforms. • Human Resources: Resolve staffing shortages by fast-tracking recruitments and re-engaging experienced retired officers on 1-year contracts. • Stability: A special circular will be issued to retain trained staff in their posts until the evaluation concludes in November 2026. • Timeline: A Special Task Force (STF) must submit a progress report to the President within two weeks. _Summary based on official presidential review and provisional evaluation data._
## 📈 China to Ban Hidden Car Door Handles by 2027
China’s Ministry of Industry and Information Technology has announced a ban on hidden/flush door handles starting January 1, 2027, citing critical safety concerns. This shift impacts the global automotive and EV supply chains, where minimalist designs have become an industry standard. • New Safety Regulations: All vehicles (excluding tailgates) must feature both interior and exterior mechanical releases. This ensures doors remain operable during power failures or post-crash emergencies. • Compliance Timeline: New models must comply by 2027, while previously approved models are granted a two-year extension to phase out existing designs. • Industry Context: Popularized by Tesla in 2012, these handles reduce drag but have faced scrutiny following high-profile accidents, including a fatal crash involving a Xiaomi EV where rescuers could not open the doors. • Global Impact: As the world’s largest EV market and home to BYD (now the global leader in EV sales), China’s regulatory shift will likely force a design pivot across the manufacturing and automotive electronics sectors worldwide. _Note: Based on official MIIT policy announcements as of Feb 2026._ ---