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COPF slams Treasury for delaying imposition of VAT on foreign digital and software providers

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Harsha de Silva

The Committee on Public Finance (COPF) told officials from the Ministry of Finance that the state was suffering a substantial revenue loss due to a delay in imposing VAT on foreign digital and software providers.

COPF Chairman Harsha de Silva, MP, said that had also created an unequal playing field for domestic digital and software providers.Even local travel booking agents were subject to VAT, while websites such as Booking.com had been exempted, the COPF said.

The Ministry officials said they were awaiting the introduction of a new law to impose VAT on foreign service providers.The COPF members said the officials had to put in place a mechanism to collect taxes and create an equal playing field until the new law was made.

The COPF also deliberated on the Social Security Contribution Levy (Amendment) Bill. The amendment to the Act, lowering the turnover threshold of registration for the Social Security Contribution Levy from Rs. 120 million to Rs. 60 million per annum, effective from 01 January 2024, had been approved by the Committee.

However, the chair raised concerns about the need for maintaining two separate tax structures.He suggested consolidating the taxes under the VAT, which would result in an average effective rate of 22 percent when combined with the Social Security Contribution Levy. In response, the Ministry of Finance said their objective was to meet revenue targets and that they intended to use that approach pending transition to a more streamlined tax system.

Furthermore, the COPF also queried the Officials about the progress of recovering the lost revenue resulting from the initial ‘sugar scam’, as highlighted in the report by the Auditor General. Officials contended that it should not be classified as a tax loss, but rather as tax foregone due to the reduction of the special commodity levy from Rs 50 to 25 cents. Despite that explanation, the Committee asked the officials to furnish data on certain companies that had disproportionately profited from the tax adjustment.

The COPF Chairman raised questions regarding the Government’s inability to recover the outstanding forgone tax, especially in light of substantial tax hikes such as those on PAYE and VAT affecting the average Sri Lankan. Officials said they had been able to reclaim only 30% of the improperly accrued tax through corporate tax, leaving the remaining 70% uncollectable within the existing tax framework. The COPF urged officials to explore options for retrieving the entire forgone tax revenue or propose new legislation to address such scenarios in the future and prevent their recurrence. While both the VAT (Amendment) bill and the Social Security Contribution Levy were endorsed by the Committee, the Chairman dissented, expressing the aforementioned concerns.



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Fast Attack Craft P 4447 recovered in successful salvage operation

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The Sri Lanka Navy successfully recovered its Fast Attack Craft P 4447 following a successful salvage operation, bringing a multi-stage emergency response to a close.

The craft, which ran into distress during a routine patrol on 15th August 2026 off Angulana, was brought to the surface on 11th September, from a depth of approximately 80 feet. It was
subsequently towed to the Colombo Dockyard premises.
The initial phase of the operation immediately following the incident focused on search and rescue. A joint effort involving the Navy, Air Force, Police, and local fishermen from Angulana
resulted in the rescue of 11 crew members. The search and rescue phase drew to a close with the recovery of the remains of the Second in Command of the craft, on 4th September.

Following the search and rescue phase, specialized Navy diving and salvage teams launched a dedicated recovery phase against rough sea conditions and underwater challenges, adhering to
strict safety protocols. The Navy’s marine, hull, electrical, and electronic engineering teams utilized specialized technical know-how and equipment to raise the vessel in stages.

Thus, the salvage operation marked an outstanding achievement attained through the professionalism, technical expertise of Navy divers, and coordinated contribution of all
engineering and technical branches of the Sri Lanka Navy. Technical support and specialized expertise were also extended by the Sri Lanka Ports Authority and Colombo Dockyard PLC.

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CIABOC member’s appointment: Controversy over Speaker under probe heading selection process

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By Shamindra Ferdinando

The Opposition should intensity its focus on the forthcoming selection of a member of the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) and remain vigilant as Speaker Dr. Jagath Wickremaratne, MP, the head of the Constitutional Council (CC) tasked with making the relevant recommendation, is under investigation by the CIABOC, sources familiar with the ongoing inquiry told The Island.

Chethiya Goonasekara, PC, is expected to complete his three-year term on Dec 31, 2026. Sources pointed out that CIABOC Commissioners are appointed by the President on the recommendation made by the 10-member Constitutional Council.

The CIABOC initiated the investigation following a complaint lodged by suspended Chief of Staff and Deputy Secretary General of Parliament Chaminda Kularatne in early February this year. Sources said that as Goonasekera is scheduled to complete his term toward the end of 2026, the CC would have to call applications soon to choose the successor.

Goonasekara received his appointment from President Ranil Wickremesinghe in January 2024. A Justice W. M. N. P. Iddawala was appointed Chairman of the CIABOC. The other commissioner is K. Bernard Rajapakse.

Asked whether Iddawala and Rajapakse, too, would complete their terms soon, sources said that in terms of the Anti-Corruption Act No 09 of 2023, the Chairman of CIABOC would hold office for a period of five years, second commissioner (K. Bernard Rajapakse) for four years and the third commissioner (Chethiya Goonasekara) for a period of three years.

Sources said that the Opposition as well as civil society representatives in the CC should take up the issue of Speaker facing an investigation by the CIABOC taking part in the forthcoming selection process. Responding to queries, sources emphasized that the issue was whether in terms of Section 107 of the Anti-Corruption Act the participation of the Speaker in the selection process amounted to a violation of the Act itself.

The current members of the CC are Dr Jagath Wickramaratne, Speaker and Chairman of the Constitutional Council, Dr. Harini Amarasuriya, Prime Minister, Sajith Premadasa, Leader of the Opposition, Bimal Rathnayake, MP, Aboobucker Athambawa, MP, Ajith P. Perera, MP, Sivagnanam Shritharan, MP, Austin Fernando, Civil society representative, Prof. Wasantha Seneviratne, Civil society representative and Ranjith Ariyaratne, Civil society representative.

Sources pointed out that in spite of the sensitivity of the case, the CIABOC recorded Kularatne’s statement in the second week of August, six months after he lodged the complaint.

The CIABOC on 3, 8 and 10 Sept recorded the statements from the Transport Officer, Deputy Director, Administration and Assistant Director, Finance regarding the use of facilities by the Speaker, those assigned to his staff and other relevant matters.

The NPP named Dr. Wickramaratne as the Speaker after Asoka Ranwala resigned over controversy regarding his higher education qualifications.

SJB lawmaker Dayasiri Jayaskera has repeatedly raised the issues concerning the Speaker with the focus also on the Speaker using two government-managed residences, relevant staff in addition to expenditure on food, transport and fuel provided to the Speaker’s private secretary.

Political sources said that trouble erupted after the Parliamentary Staff Advisory Council in late January sacked Kularatne accusing him of providing false information to secure his appointment. Before being appointed as the Deputy Secretary-General of Parliament in 2023, Kularatne held several high-ranking positions, including Secretary to the Chief Government Whip, Additional Secretary to the President, Additional Secretary to the Prime Minister, and Additional Secretary to the Leader of the Opposition.

The SJB declared in Parliament that Ranwala should be brought back as the Speaker as they have no faith in Wickramaratne. MP Mujibur Rahuman jokingly told parliament that the Opposition wouldn’t raise Ranwala’s educational qualifications.

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GMOA: Countrywide cadre revision not done since 2015

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Dhammika

The Government Medical Officers’ Association (GMOA) has stressed the need to conduct a comprehensive countrywide cadre revision urgently.

GMOA spokesman Dr. Lasitha Dhammika told The Island that the failure on the part of successive governments to conduct cadre revision caused the deterioration of the public sector health services. Due to the absence of required statistics, they hadn’t been able to fully comprehend the situation on the ground and to ascertain the requirements of the public.

Dr. Dhammika pointed out the expansion of the services without supporting statistics and the need to initiate an immediate cadre revision. According to him, the GMOA had raised this issue with successive governments without success. The GMOA spokesman said that they also sought relevant information from the Health Ministry in terms of the Right to Information (RTI) Act two weeks ago but was yet to receive response.

(SF)

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