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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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Former first lady Shiranthi Rajapaksa arrested by CIABOC

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Former first lady Shiranthi Rajapaksa, wife of former President Mahinda Rajapaksa was  produced before the Hulftsdorp court, after  being  arrested by officers of the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) and produce

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U.S. Navy ship USS Tulsa arrives in Colombo for replenishment visit

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The U.S. Navy ship USS Tulsa (LCS 16) arrived at the Port of Colombo this morning, 7 October 2026 for replenishment purposes.

The visiting ship was welcomed by the Sri Lanka Navy in accordance with naval traditions.

The 127.7-metre-long platform is a Littoral Combat Ship commanded by Commander BM Wanier. Commissioned on 16 February 2019, USS Tulsa has since been in service with the US Navy.

The ship previously made a port call in Sri Lanka on 27 August 2025.

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Fuel crunch looms

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Govt. tells fuel distributors to maintain stocks to ensure uninterrupted supplies

by Saman Indrajith and Norman Palihawadane

The government had instructed private fuel distributors to maintain minimum stocks and ensure uninterrupted supplies to the market, Energy Minister Anura Karunathilaka told Parliament yesterday (06).

Karunathilaka said the Ministry of Energy Secretary had notified the relevant companies of the requirement, following a reduction in supplies by some private distributors, amid higher international fuel prices.

The Minister said private companies had informed the government that they were facing losses because international prices had risen while fuel was being sold, locally, at prevailing prices. As a result, some companies had reduced the volumes released to the market.

The reduced supplies had increased the burden on the Ceylon Petroleum Corporation (CPC), whose share of the diesel market had risen from about 54% to 82%, the Minister said.

“The CPC currently holds an 82% share of the market,” he said, adding that it had increased its supplies, compared with February, to compensate for the reduction by private distributors.

Karunathilaka said the government could not, under the existing agreements with private companies, specify the quantities they should supply to individual filling stations. However, it could require them to maintain minimum stocks in the country.

The Minister said the Energy Ministry had already instructed companies that had failed to maintain the required stocks to take steps to prevent supply disruptions.

The Minister attributed the queues reported at some filling stations to reduced supplies from private distributors, as well as normal variations in fuel distribution. He also said demand for CPC fuel had increased because private companies generally did not provide fuel to dealers on credit, while the CPC offered a three-day credit facility.

“We expect that, as the Ceylon Petroleum Corporation takes on this additional burden, the problem will ease to some extent by Wednesday or Thursday,” Karunathilaka said.

He said instructions had also been issued to increase supplies to CPC filling stations. A special discussion on the issue is scheduled for today (07), with officials of the Energy Ministry and CPC expected to participate,

along with President Anura Kumara Dissanayake.

Meanwhile, Petroleum Dealers’ Association officials have called for an early solution to the supply issue. Association Chairman D.V. Shantha Silva said queues had been reported at many filling stations, mainly those operated by private distributors.

He said the situation was not due to an overall shortage of fuel, but was linked to reduced orders by Lanka IOC, Sinopec and R.M. Parks amid concerns over losses incurred on fuel sales.

The Ceylon Petroleum Private Tanker Owners Association has urged motorists to refrain from panic buying, saying there was no nationwide disruption to fuel supplies.

The government earlier increased fuel prices and introduced a per-litre diesel subsidy following concerns raised by distributors over rising international prices.

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