📈 CA Sri Lanka Budget 2026 Review: Integrity, Tax Reforms & Slow Recovery

• The seminar acknowledged Sri Lanka’s hard-earned progress (e.g., debt rating upgrade) but called for national financial integrity and collective stewardship from all stakeholders, especially the corporate sector. • Economic Reality Check: Recovery is deemed slow and difficult. Poverty has more than doubled (likely >30%), and real wages are 10-20% lower than eight years ago. A call was made for closer coordination between the Treasury (fiscal) and Central Bank (monetary). • Major Tax Policy Concerns (SVAT Abolition): • The primary concern for exporters and the apparel sector is potential cash flow delays from VAT refund issues following the abolition of the SVAT scheme. • IRD assured two special export refund units are established to expedite refunds within the mandated 45 days via a new risk-based system and proposed e-invoicing. • Revenue Generation & Expansion: • Government aims to meet targets by expanding the tax net, including imposing VAT/SSCL on imported fabric/oil and lowering the VAT/SSCL registration threshold from Rs. 60 Mn to Rs. 36 Mn annually. • Critique: Reducing the SSCL threshold was argued to be counterproductive due to the cascading nature of the tax. • Investor Confidence & Systemic Issues: • Initiatives to boost confidence include the proposed Investment Protection Act and a Single Window digital platform. • A significant need was highlighted for a tax ombudsman to resolve the massive amount of tax disputes resulting from the self-assessment system.