Budget 2026 Boosts SMEs: Key Concessions & Reforms 🚀

• The 2026 National Budget, presented by President Dissanayake, focuses on sustained GDP growth above 7% post-IMF reforms, recognizing SMEs (contributing over 52% of GDP) as the economy's backbone. • Tax Incentives: The qualifying investment threshold for enhanced capital allowances (100% to 200%) has been significantly reduced from US$ 3 million to $250,000, making tax benefits accessible to a wider range of SMEs. • Financing & Allocation: The Budget prioritizes concessional loan schemes, allocating substantial funds: • Rs. 7,700 million for the SME Development Loan Scheme. • Rs. 6,200 million for Agricultural Value Chain Development. • Rs. 1,700 million for the New Comprehensive Rural Credit Scheme (NCRCS), offering agricultural loans up to Rs. 3 million at 5% interest. • Institutional Reforms & Digitalization: • SME support agencies (IDB, NEDA, SMED) will be consolidated under the Industrial Development Board for streamlined efficiency. • Measures include establishing Startup Ecosystems, IT zones, and a Trade National Single Window (TNSW) to simplify export documentation and improve market access. • Challenges Noted: Concerns remain that lowering the VAT and SSCL thresholds to Rs. 36 million will bring more SMEs into the tax net, increasing compliance costs, alongside the need for swift and transparent implementation of loan schemes.