Regulatory & Policy News
View all(60)Mandatory Electronic Asset Declarations Launched by CIABOC ⚖️
The Commission to Investigate Allegations of Bribery or Corruption (CIABOC) has officially transitioned to a digital framework for financial transparency, effective today, March 31, 2026. • Governance & Compliance: A new centralized electronic system is now mandatory for the submission of all asset and liability declarations. • Digital Transformation: The move shifts away from manual filings to a streamlined electronic process to enhance monitoring and accountability within the public sector. • Legal Mandate: Based on current directives, the electronic filing is no longer optional, marking a significant step in Sri Lanka's anti-corruption and legal infrastructure reforms. • Context: This implementation aims to improve the efficiency of tracking high-level financial data, crucial for maintaining integrity in the national economy. _Note: Summary based on initial implementation data as of March 31, 2026._
📈 Ceylon Chamber Urges Balanced Reforms in 2026 Tax Bill
The Ceylon Chamber of Commerce (CCC) has submitted comprehensive recommendations to the Ministry of Finance regarding the Inland Revenue (Amendment) Bill of 2026, emphasizing the need for a tax framework that supports business continuity and investment. • Thin Capitalisation Rules: The Chamber advocates for excluding negative reserves from gearing calculations to prevent excessive tax burdens on financially distressed firms. It also calls for the full allowability of finance costs on all genuine commercial borrowings. • Compliance & Penalties: Proposed 6-to-9 month timelines for submitting evidence are deemed too rigid. The CCC suggests more flexibility and argues against stringent penalties, including imprisonment, for minor compliance lapses to safeguard investor confidence. • Insurance Sector: Recommendations include deferring amendments to Section 67 pending further industry consultation. Key concerns involve the taxation of policyholder distributions and clarity surrounding IFRS 17 implementation. • Regulatory Powers: The CCC highlighted that the discretionary powers of the Commissioner General must be clearly defined and transparent to avoid economic uncertainty. The Chamber continues to engage with policymakers to ensure the bill is amended during the Committee Stage, aiming for a stable environment to attract private investment and support national recovery. 🇱🇰
📈 Clarity Urged for Digital Services VAT Implementation
Sri Lanka is set to implement VAT on digital services provided by non-resident suppliers effective April 1, 2026, yet stakeholders warn of a significant "regulatory gap" regarding administrative guidance. • Implementation Status: While the policy was deferred from October 2025 to April 2026, the Inland Revenue Department (IRD) has yet to issue updated technical instructions, leaving global platforms reliant on a superseded July 2025 Gazette. • Key Concerns: • Lack of clear registration procedures for non-resident digital service providers. • Undefined responsibilities for intermediaries (e-marketplaces) and payment facilitators. • Absence of specific documentation and invoicing requirements for ICT/BPM and global tech sectors. • Economic Risks: Delay in proactive guidance risks non-compliance, tax disputes, and under-collection of revenue. Over 120 countries already have established frameworks that Sri Lanka is expected to follow to ensure revenue outcomes and system credibility. • Required Actions: Stakeholders are calling for an urgent implementation circular from the IRD to clarify filing processes and transitional rules before the 24-hour countdown to the new fiscal deadline. _Note: Based on current industry analysis and IRD public notices._
⚖️ Sri Lanka’s Community Mediation Model: A Low-Cost Justice Revolution
Sri Lanka’s nationwide community mediation system is emerging as a global benchmark for efficient, low-cost dispute resolution, offering a viable alternative to the country’s heavily backlogged formal court system. 📈 • Key Performance Metrics (2023) • Nearly 250,000 cases received by mediation boards. • Almost 70% settlement rate for cases reaching a hearing. • Total of 329 Boards operational across the island. • Supported by 8,700 trained volunteer mediators (teachers, health workers, and community leaders). • Economic & Social Impact • Cost Efficiency: Delivers justice at a fraction of the cost of formal litigation for both the state and citizens. • Sector Specialization: Evolution of specialized boards to handle land conflicts and financial disputes, adapting to shifting economic needs. • Productivity: Reduces time-to-resolution, preventing minor disputes from escalating into lengthy, expensive civil cases that can stall economic activity for decades. • System Highlights • Established under the Mediation Boards Act of 1988 and overseen by an independent Commission. • Operates in community venues (temples, schools) without lawyers, focusing on interest-based solutions rather than adversarial litigation. • Highly scalable model with potential for "export" to other nations facing overloaded judiciary systems.
Seminar on Competition Policy & Law: Strengthening Sri Lanka’s Economic Reforms 📈
• The Event: JICA, the World Bank, and the Presidential Secretariat convened over 70 policymakers and private sector leaders in Colombo to discuss a modern competition framework for Sri Lanka. • Core Objectives: The seminar focused on how fair competition can drive export growth, prevent monopolies, and enhance digital transformation and consumer choice. • Strategic Reforms: Senior Additional Secretary to the President highlighted ongoing measures to improve the business climate for SMEs, including: • An e-procurement platform. • Tariff reforms. • The National Single Window. • International Expertise: The Japan Fair Trade Commission (JFTC) shared insights from Japan’s experience in strict enforcement and the liberalization of the electricity market. • Key Economic Impact: JICA emphasized that competition policy is a vital pillar for recovery. Strengthening domestic industries will improve their global competitiveness and ensure long-term resilience. • Future Path: Experts concluded that success requires comprehensive legislation, a coherent policy, stronger enforcement capacity, and active engagement from the private sector and civil society.
Urgent Call for Chemical Safety Reforms in Sri Lanka 📈
A recent report highlights systemic gaps in Sri Lanka's regulatory framework, posing significant risks to public health and the economy. Current oversight for consumer products is fragmented, leaving many daily-use items unregulated. • Critical Safety Findings: Investigations by the Consumer Affairs Authority revealed mercury levels in dozens of skin-lightening products exceeding national limits by "orders of magnitude." Similar risks are rising in the wellness and dietary supplement sector. • Regulatory Gaps: Oversight is currently split between the NMRA, SLSI, Ministry of Health, and CAA. The 2015 NMRA Act failed to fully carry forward previous safety provisions for the cosmetics industry, leaving a majority of products on the market unregistered. • Economic Impact: Unsafe products increase national healthcare spending, erode consumer trust, and create an unfair playing field for legitimate businesses adhering to high standards. • Proposed Solutions: • Establish a unified, science-based coordination body between existing agencies. • Implement toxicological risk assessments for imports and local manufacturing. • Expand national chemical testing capacity through ICT/BPM and university partnerships. • Adopt global models like Singapore’s mandatory registration or India’s restricted chemicals list. • Market Shift: With the rise of social media and online marketplaces, products often bypass traditional retail channels, requiring digital-first monitoring to protect the retail and e-commerce sectors.
⚖️ Supreme Court Orders Rs. 275M Settlement in Health Procurement Case 📉
The Supreme Court of Sri Lanka has ruled that former Health Minister Keheliya Rambukwella and four other officials violated public Fundamental Rights regarding the irregular procurement of health supplies under the 2022 Indian Credit Line. • Overall Penalties: A total of Rs. 275 million was ordered to be paid to the State from the personal funds of the accused. • Individual Liability: Keheliya Rambukwella (Former Health Minister): Ordered to pay Rs. 75 million. Janaka Chandragupta (Former Ministry Secretary): Ordered to pay Rs. 50 million. Prof. S. D. Jayaratne (Former NMRA Chairman): Ordered to pay Rs. 50 million. Dr. Vijith Gunasekera (NMRA CEO): Ordered to pay Rs. 50 million. Dr. Thushitha Sudarshana (Former MSD Deputy Director): Ordered to pay Rs. 50 million. • Case Context: The ruling follows a petition by Transparency International Sri Lanka concerning the procurement of supplies from an unregistered company, bypassing standard procedures. This judgment emphasizes accountability within the healthcare and public administration sectors, critical for maintaining fiscal discipline and public trust in state procurement.
### 📈 Drug Quality & Regulatory Compliance in Sri Lanka
The National Medicines Regulatory Authority (NMRA) faces a significant "implementation gap" between its legal mandate and the practical enforcement of quality standards for the private sector, which accounts for 60% of the total spend on drugs and medical supplies. • Regulatory Framework & Gaps Private Sector imports exceed 4,000 items, compared to under 1,000 in the State Pharmaceuticals Corporation (SPC) system. While the NMRA Act No. 5 of 2015 mandates ensuring "efficacious, safe, and good quality medicines," audits reveal a massive registration backlog and a "reactive" rather than "proactive" testing culture. The National Medicines Quality Assurance Laboratory (NMQAL) lacks the resources to test the volume of private imports, leading to reliance on "provisional" registrations. • Audit & Oversight Findings Emergency Waivers: During the 2022–2023 crisis, Section 109 was overused to bypass essential quality checks. Data Integrity: A 2023–2025 COPE investigation highlighted a "data deletion incident" that lost critical digital records of importers and quality certificates. Staffing: The NMRA operates with a technical staff smaller than a single large private hospital, hindering market surveillance. • Strategic Reforms (2025–2026) Digital Integration: A World Bank-funded "Digital Gatekeeper" project aims to link NMRA with Customs to automate batch certificate verification. Regulatory Shifts: New mandatory labeling (stickers) and digital data collection for all imports since January 2023 are being implemented to curb falsified products. Proposed "Positive List": International bodies suggest a "Private Sector Essential Medicines List" to prioritize surveillance on therapeutically necessary brands, though this faces potential industry pushback. _Note: Summary based on provisional audit reports and current situational analyses._ ---
Court Rules in Favor of CBSL on EPF Data Disclosure ⚖️
The Court of Appeal has set aside a Right to Information (RTI) Commission order that previously directed the Central Bank of Sri Lanka (CBSL) to disclose detailed transaction-level data regarding the Employees’ Provident Fund (EPF). • Legal Ruling: The Court held that specific details of government securities transactions—including purchase dates, yields, prices, and counterparties—are exempt under Section 5(1)(d) of the RTI Act. • Economic Rationale: Disclosure of investment strategies was deemed commercially sensitive. The Court noted that publicizing this data could allow market participants to outmaneuver EPF bids, placing the Fund at a competitive disadvantage and potentially reducing returns for millions of member contributors. • Governance & Oversight: While the court acknowledged the importance of transparency, it ruled that the EPF is already subject to sufficient oversight via the Auditor General, annual reports, and parliamentary review. • Precedent: The judgment affirms that the Central Bank’s fiduciary duty to protect fund assets outweighs the public interest claim in this specific instance, as the petitioner failed to prove that disclosure benefits would surpass the potential harm to the Fund's market position.
📈 Sri Lanka’s Courts Clear Decades-Old Backlog, Generate Rs. 952.9 Mn
Sri Lanka has successfully cleared long-standing accumulations of case productions across Magistrates’ and High Courts, addressing critical storage and security inefficiencies. This nationwide initiative has revitalized judicial spaces while recovering significant economic value. • Overall Revenue: The disposal of items stagnant for over two decades generated Rs. 952.9 million in 2025 alone. Total judicial revenue—including fines, notary fees, and bail bond confiscations—reached Rs. 6.57 billion for the year. • Resource Recovery: The project targeted a vast range of seized items, including vehicles (lorries, tractors, motorcycles), timber, sand, and industrial tools. By clearing these, the state mitigated the decay of assets originally imported at a high foreign exchange cost. • Operational Impact: Led by the Judicial Service Commission in collaboration with the "Clean Sri Lanka" program, the effort has cleared court premises of hazardous materials like explosives and prohibited substances, improving security and logistical flow. • National Context: Beyond the fiscal gain, the initiative supports economic stability by returning idle resources to the economy and enhancing public confidence in the efficiency of the justice system.
CSE & SEC Forum: Scaling SOEs via Capital Market Integration 📈
The Securities and Exchange Commission (SEC) and Colombo Stock Exchange (CSE) convened over 45 State-Owned Enterprises (SOEs) to discuss transitioning toward capital market funding to reduce Treasury reliance and enhance governance. • Strategic Objectives The initiative aims to provide SOEs with alternative funding pathways for mid-to-long-term growth while improving transparency and operational efficiency. Key focus areas include reducing the burden on public finances and attracting institutional investors. • Market Performance & Capacity • Between 2020 and 2025, listed entities raised Rs. 560.58 Bn through debt, equity IPOs, and rights issues. • The investor base has seen significant growth, with CDS accounts recently surpassing the 1 million threshold. • 2025 saw 25 new listings, including 6 companies, utilizing diverse instruments like Blue, Green, and Social Bonds. • Key Mechanisms for SOEs • Catalyst Board: A flexible entry point with relaxed regulations specifically designed for SOE integration. • Equity & Debt: Options for partial listing where the State retains control while allowing public and employee participation via ESOP schemes. • Governance: Emphasis on regular financial reporting to build investor trust and bridge existing governance gaps. • Economic Impact Integration is viewed as a catalyst for economic transformation, deepening market liquidity, and streamlining the quality of essential services provided by the state sector.
### 📈 Sri Lanka Advances in AML/CFT Review; On-Site Evaluation Set for October
Sri Lanka has crossed three critical milestones in its third Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Mutual Evaluation process, according to the Financial Intelligence Unit (FIU) and the Central Bank of Sri Lanka (CBSL). • Key Milestones & Timeline • Feb 20: Submitted technical and contextual information to the Asia/Pacific Group (APG). • March 20: Met deadline to submit the Technical Compliance Report covering 40 FATF recommendations. • June 19: Deadline for the "Effectiveness Report" detailing practical framework performance. • Oct 26 – Nov 6: Scheduled on-site review by APG assessors. • July 2027: Final Mutual Evaluation Report expected to be adopted. • Legislative & Sector Progress • Amendments to three core laws (Financial Transactions Reporting, Prevention of Money Laundering, and Suppression of Terrorist Financing Acts) are now gazetted and await Parliamentary approval. • The evaluation impacts the banking & finance sector and private sector reporting entities, which will undergo direct scrutiny during the on-site visit. • Economic Impact Successful compliance is vital for maintaining correspondent banking relationships and investor confidence. The process is a key safeguard against potential "grey-listing" risks as the country pursues economic stabilization. Based on provisional data and official CBSL statements.