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Harsha finds many drawbacks in VAT system, ‘including lot of confusion even at highest echelons’

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Harsha de Silva

By Rathindra Kuruwita

There is a lot of confusion over the amendments to the Value Added Tax (VAT), and it will take a long time for the authorities to address the teething problems in the relevant software systems, Samagi Jana Balawegaya (SJB) MP, Harsha de Silva says.

Dr. de Silva pointed out that there was still a lot of confusion even at the highest echelons about the amendments to VAT. “Even the Colombo Tea Auction was suspended because they have no idea as to how VAT would affect their operations. We also need to ensure that the software at the IRD is ready. I think we will take some time to address technical issues that will arise,” Dr. De Silva said, noting that the amendment to the VAT regime was not that complicated. Goods and services that were taxed at 15 percent have been increased to 18 percent. Moreover, 97 items that were exempt from VAT previously were now subjected to VAT, he said.

“But people need to be better educated on how they should pay VAT. A company that has a turnover of over Rs 60 million a year must be registered for VAT. So, people might wonder if they have to pay VAT, if they buy a milk packet or an exercise book from a supermarket and whether they do not need to do so when they buy one from a roadside shop,” Dr. de Silva said.

“It is obvious that traders are taking advantage of this confusion,” he said, adding that traders were only acting as an agent for the government when they collected tax from the consumer.

“They can’t pocket the money so collected. They have to hand over that money to the state. There are also many issues in the efficiency in collecting taxes by government agencies. These loopholes will allow corrupt businesspeople to manipulate the VAT system,” he said.

The SJB MP added that Sri Lanka had a history of VAT frauds. Those between 2002 and 2004 had cost the Inland Revenue Department dear, he said.

“The government said that from 01 January 2024, everyone over 18 had to obtain a Tax Identification Number (TIN), which had to be produced when opening a bank current account, securing approval for a building plan, registering a motor vehicle or renewing a revenue licence, and registering land or a title to land by the buyer. The government informed us so in November. But this week the government has given a one-month grace period. So it’s obvious that the government has not done enough to ensure compliance,” Dr. de Silva said.

The coming year would be extremely difficult for the average Sri Lankan given the government’s target to double the revenue from VAT compared to the previous year, he said.

The government was planning to collect about Rs 1,400 billion from taxes in 2024, he said.In 2023, the government had sought to rake in about Rs 700 billion from VAT, Silva said.

“So, the government is planning to collect double that amount in the current year. It is obvious that the average Sri Lankan family would be severely affected by the enhanced VAT,” he said.

“Before 01 January 2024, the VAT was not imposed on diesel and petrol. The government has imposed an 18 percent VAT on them. These products were subjected to the Ports and Airports Development Levy (PAL) of 7.5 percent before, and this levy has been repealed. So, the actual increase in taxes due to the application of VAT to diesel and petrol is 10.5 percent.”

The SJB MPs said that there were Sri Lankan companies that produced software for Sri Lankan companies. Their products were now subjected to VAT. But if the software came from overseas it was not subjected to VAT, he said.

“This is a big problem. We must help the local companies. We, members of the Committee on Public Finance, tried our best to resolve this issue. Our proposal was that the government must not consider where the software originated from. We asked it to consider where the software was used. If the service is used in Sri Lanka, it should be subjected to VAT. The President then asked the Treasury Secretary to implement our proposal,” he said.



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Physical development must be matched by the enrichment of people’s inner lives through aesthetics and culture – PM

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Prime Minister Dr. Harini Amarasuriya stated that while a country develops its roads, buildings and economy, the inner lives of its people must also be enriched through aesthetics, culture and creativity. Development cannot be measured solely by improvements in physical resources, and the empathy and the appreciation of the arts is a key aspiration of the new era of renaissance.

The Prime Minister made these remarks while inaugurating the ’Aluth Wessa’ Cultural Festival and Exhibition, organised jointly by the Kandy District Secretariat, the Department of Cultural Affairs and the Kandyan Cultural Center on 15 October at the Kandy District Secretariat.

During the event, the Prime Minister also presented awards to artists from the Kandy District in recognition of their outstanding contributions to the arts.

Addressing the gathering, the Prime Minister further stated: “Kandy is a place where we can best experience the value of our country’s historical, artistic and cultural heritage. The Temple of the Sacred Tooth Relic, the wood carvings of Embekka, the murals of Degaldoruwa, the Kandyan dance tradition, and the contributions of renowned artists such as Pani Bharath, Dr. Ananda Coomaraswamy and Minnette de Silva have helped shape a distinctive cultural identity unique to Kandy.

During the recent disaster, when the people of Kandy faced immense difficulties, people from districts such as Galle, Matara and Kalutara voluntarily came forward to extend tremendous support. Their empathy and commitment deserve our sincere appreciation. Following the disaster, several initiatives are already progressing rapidly to help Kandy recover and rebuild. These include restoring the Upcountry railway line, repairing damaged houses and rehabilitating historic temples that were destroyed through the Central Cultural Fund. Through our education reforms, we aspire to nurture a generation that goes beyond professional knowledge and skills, developing artistic sensitivity alongside human values and compassion.”

The event was attended by the Most Venerable Naramapanawe Ananda Thero, Anunayake of the Asgiri Chapter of the Siyamopali Maha Nikaya and Chancellor of the University of Kelaniya, along with members of the Maha Sangha and other religious leaders. Also present were Central Province Governor Dr. Suranga Fernando, Members of Parliament Jagath Manuwarana, Thanura Dissanayake, Thushari Jayasinghe and E. M. Basnayake; the Mayor and local councillors, Kandy District Secretary Indika Udawatta, Divisional Secretaries, public officials, artists, parents, and children.

(Prime Minister’s Media Division)

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Review of the operations of the 1818 Hotline introduced to report drug-related information

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A discussion to review the operations of the 1818 hotline and progress made in its implementation was held on Thursday morning (15) at the Presidential Secretariat, under the chairmanship of Secretary to the President Dr Nandika Sanath Kumanayake. The hotline was introduced as part of the ‘A Nation United’ national operation to eradicate the illicit drug menace.

The hotline was established to enable the public to provide security authorities with accurate information on drug trafficking, distribution and any related suspicious activities taking place across the country. Members of the public anywhere in Sri Lanka can submit information through this service, with the confidentiality of informants fully protected. The information received is acted upon promptly. Operating from the ‘A Nation United’ Media Centre, the service is coordinated under the direct supervision of the Presidential Secretariat and the ‘A Nation United’ National Steering Committee. It enables members of the public to provide information to security authorities securely at any time.

The discussion also focused on the first anniversary of the ‘A Nation United’ national operation, which falls on 05 November and measures to strengthen its effectiveness in protecting future generations from the drug menace and building a safe, drug-free society.

Venerable Madovita Vajira Buddhi Thera, Director (Piriven) of the Ministry of Education, Higher Education and Vocational Education, Ravi Seneviratne, Secretary to the Ministry of Public Security and Parliamentary Affairs, Prince Senadheera, Secretary to the Ministry of Buddhasasana, Religious and Cultural Affairs, Roshan Gamage, Senior Additional Secretary to the President, Attorney-at-Law Priyantha Weerasooriya, Inspector General of Police, H. S. K. J. Bandara, Director General of the Department of Government Information, Gamini Senaratne, Commissioner-General of Buddhist Affairs, Chathuri Pintu, Director of the Department of Christian Religious Affairs, Y. Aniruthanan, Director of the Department of Hindu Religious Affairs and M. S. M. Nawaz, Director of the Department of Muslim Religious Affairs, also attended the meeting. A group of officials representing the tri-forces and other relevant government institutions were also present.

(President’s Media Division)

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SJB: Govt. trying to reappoint Jayakody, who resigned from Cabinet amidst coal scam

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MP S.M. Marikkar

Marikkar claims coal losses more than twice Treasury bond scam

By Shamindra Ferdinando

The SJB has accused the NPP government of trying to create an environment conducive for the re-appointment of Kumara Jayakody who resigned on 17 April 2026 over a coal scam perpetrated in 2025.

Colombo District MP S.M. Marikkar Tuesday (13) alleged that Jayakody’s successor Anura Karunathilaka was spearheading the efforts at the behest of President Anura Kumara Dissanayake.

Addressing the media at the Opposition leader’s Office at No. 30, Sir Marcus Fernando Mawatha, Colombo 07, Marikkar said that the NPP was busy propagating a lie that the losses amounting to Rs 15.68 bn could be entirely recovered by way of penalties and funds held as deposits in line with the supplier. The Opposition MP placed the amount held by the government at Rs 16.48 bn.

Marrikar claimed that the NPP’s propaganda project to whitewash Jayakody was meant to bring Jayakody back into the Cabinet of ministers in January next year. The top SJB spokesman said that the findings of the Sectoral Oversight Committee (SOC) on Infrastructure and Strategic Development report on the losses suffered by the use of substandard coal had been used to back the government move.

The inquiry was held into procurement for 2025/2026 seasons made from Trident Chemphar, an Indian company whose selection was questioned by the National Audit Office in a special report submitted to parliament before the vote on no faith motion against Jayakody.

Marikkar said that the NPP in its haste to build a case for Jayakody’s return to the cabinet had conveniently forgotten that six of the 25 shiploads of coal ordered from Trident Chemphar were never delivered. In a desperate bid to cover the shortfall, the government paid Rs. 2,284 million above the market price in emergency procurement. As the SOC had rejected the tests conducted by an Indian company and ordered fresh tests on substandard coal, an additional Rs 26.6 mn had been paid to an Australian lab, MP Marikkar said, explaining other losses caused by the corrupt deal.

Marrikar explained how the procurement of substandard coal altogether cost the taxpayer nearly Rs 20 bn while the government engaged in a project to clear Jayakody. The former minister is also indicted in the Colombo High Court in an earlier corruption case.

Marrikar emphasized that the government should accept responsibility. Comparing the action taken in respect of 2015 and 2016 Treasury bond scams and the coal scam, MP Marikkar said that the losses caused by Trident Chemphar fraud was double the Treasury bond scam. A future government would investigate the coal scam and punish all those responsible. The NPP under any circumstances couldn’t bring back Jayakody to the cabinet as he was directly responsible for the fraud, the Colombo District lawmaker said.

At the time the UNP perpetrated Treasury bond scams, Marikkar represented the UNP parliamentary group which made desperate bids to protect the bond thieves.

The SJBer refused to answer questions regarding any other issue. Marikkar reacted angrily when a journalist sought to raise a group of SJB MPs meeting the Most Ven Thibbatuwawe Sri Sumangala Mahanayake Thera of the Malwathu Chapter in Kandy. Then the MP accused a section of the media of trying to suppress the coal scam by raising other issues. Marrikar vowed that they wouldn’t allow Jayakody’s return to the cabinet. The NPP government’s reputation had been devastated by the coal scam and current efforts to cover up the direct involvement of Minister Jayakody would not succeed, he said, warning the NPP should be prepared to face the consequences.

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