Business
New tax bill: Sri Lanka’s corporates wary about ‘subtle’ non-deductions
Say draconian powers drafted to be given to Inland Revenue Chief
Calls for independent body to get a fair hearing
By Sanath Nanayakkare
The new tax bill is one that demotivates taxpayers from being compliant and one that restricts existing taxpayers from their legitimate deductions, Nisreen Rehmanjee, head of corporate finance, group tax and social entrepreneurship project, John Keells Group said on Tuesday.
She said so at a webinar hosted by the Ceylon Chamber of Commerce (CCC) titled,” Implications of Amendments to the Inland Revenue Act.”
Predominantly taking a corporate view of the bill, she said,” Considering the financial situation of the country, I think that everyone has to pay more tax. That is a policy issue and I don’t have any problems with that. But we are concerned about proposed provisions on deductions, tax administration and taxpayer rights. The bill is attempting to collect taxes from those who are already paying and deny legitimate deductions that are incurred in the production of income. For example, in terms of new provisions, interest is considered to be a revenue expense and it is not a capital expense because it is basically what you pay for use of money for a year; and so it’s revenue. When it comes to capital assets it bears a condition that it has to be in use. I think that they have actually restricted this because interest is not a capital expense; it is not something you need to capitalize on because the new law recognises it as a revenue expense under section 12 and allows you a deduction. So I think it is a more restrictive deduction than an enabling provision.”
Further speaking she said,” There is a lot of significant uncertainty right now as to how exchange rate gains and losses are taxed. If one had losses why not allow those losses against gains and allow taxes to be paid on a net amount considering the very high rate of tax? The corporates are very concerned about such subtle non-deductions.”
“You should put your effort into actually broad-basing the tax net, but you are going after the people who are paying taxes. Shouldn’t that time and effort be actually spent on looking at people who are not paying taxes and who don’t have files?”
“Going to the Inland revenue Department and getting an estimate is a very judgmental call now. If you are saying that my profits this year are going to be lesser than last year, and therefore, I am estimating lower. If the assessor disputes that and the taxpayer has to go to the Tax Appeals Commission, it is an additional burden on a compliant taxpayer. We are getting crazy kind of assessments which are not defendable. IRD has a period of 30 months to make an assessment, but the tax payer is given only 14 days to analyse it, do the legal consulting and draft the appeal and submit it. That is very unfair. If the process is to be tightened then let’s reduce the time given to IRD to dispute the tax return to 18 months and make it more efficient. I think taxpayers need an independent body where they can go to and get a fair hearing before they go to the Tax Appeals Commission,” she said.
Sulaiman Nisthar, partner-tax, Ernst & Young said that agro farming, agro- processing and agro manufacturing would continue to enjoy tax concessions, but the definitions of these wordings need to be carefully evaluated.
Suresh Perera, principal of the tax and regulatory division of KPMG Sri Lanka said,” A particular provision of the bill gives draconian powers to the Commissioner General of IRD to come up with an estimate and there is no provision for it to be challenged. You have to pay taxes according to that estimate and if you don’t pay, then it is considered non-compliance. You don’t have a holdover relief position. In such a situation, you get only an extension period of six months to pay that amount. This is going to be a methodology for Commissioner General to collect taxes; just make any estimate that he wants which can’t be challenged. This is something that you need to act now and not later on because once this becomes law under article 88(3) of the Constitution, it will be too late to do anything about it.”
Duminda Hulangamuwa, senior partner and head of tax, Ernst Young & Sri Lanka said, “We made representations to the President, the Governor of the Central Bank and the Treasury Secretary on behalf of middle income individuals who are liable to pay high taxes when the new bill becomes law, but the message we got from them was they also didn’t like to increase taxes, but they were left with no other choice given the current economic realities and discussions with the IMF.”
The Securities and Exchange Commission of Sri Lanka (SEC) and the Colombo Stock Exchange (CSE), in association with the Embassy of Sri Lanka to the Kingdom of Saudi Arabia, successfully convened an investor forum on Saturday 24th January 2026 at the Radisson Blu Hotel, Riyadh Convention & Exhibition Center. Alongside the forum, the SEC and CSE facilitated a meeting with the Public Investment Fund (PIF) which is Saudi Arabia’s main sovereign wealth fund.
The forum was organized to engage directly with the vibrant Sri Lankan expatriate community in the Kingdom and international investors, highlighting compelling opportunities within Sri Lanka’s capital market following the country’s successful exit from sovereign default and restoration of macroeconomic stability.
The forum was marked by the presence of several senior level policy officials, market leaders and market regulators including; Dr. P. Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka (CBSL); Chathuranga Abeysinghe, Deputy Minister of Industry and Entrepreneurship Development; Ameer Ajwad Ambassador of Sri Lanka to the Kingdom of Saudi Arabia.; Senior Prof D.B.P.H. Dissabandara, Chairman of the SEC; Ray Abeywardena, Director of CSE; and Dr. Naveen Gunawardane, Co-Founder and Managing Director of Lynear Wealth Management.
In his welcome address, Ameer Ajwad stated, that a significant opportunity remains in broadening public participation in the capital market of Sri Lanka. As financial literacy and investment awareness among potential investors are limited, the investor forum would serve to bridge the knowledge gap. The forum offered an excellent opportunity for first-time investors, overseas investors, and those seeking to enhance their knowledge, to learn how to invest prudently, manage risk, and build wealth with discipline and confidence. Ambassador invited participants to make full use of the presence of high-level authorities from Sri Lanka’s key financial institutions, such as the Central Bank of Sri Lanka, the SEC, and the CSE, and to explore investment opportunities in Sri Lanka’s capital market, not only as a pathway to financial growth but also as a meaningful contribution to Sri Lanka’s resilience and long-term prosperity.
Agriculture-rich diversified conglomerate CIC Holdings PLC (CSE: CIC) recorded a consolidated revenue of Rs. 70.28 billion for the nine months ended 31 December 2025 (9MFY26), reflecting an increase of 8.69% YoY compared to the corresponding period of the previous year.
The Group’s gross profit increased by 10.11% to Rs. 18.42 billion, with the gross profit margin for the period under review improving to approximately 26%, supported by disciplined pricing and product mix optimisation. Profit after tax (PAT) increased to Rs. 5.97 billion from Rs. 5.70 billion in the corresponding period of the previous year, despite losses incurred in parts of the Group’s agri operations following the impact of Cyclone Ditwah, which disrupted cultivation activity during the Maha season.
The Group’s Crop Solutions sector remained the largest contributor to consolidated revenue, accounting for approximately 44.7% of total revenue, followed by Livestock Solutions at 21% and Health & Personal Care at 20.18%. The remaining sectors, Industrial Solutions and Agri Produce, contributed 8.6% and 6.4% to Group turnover respectively. Health and Personal Care , particularly export-driven product lines, recorded improved performance during the period, alongside continued growth in feeds, poultry, and veterinary care solutions, which supported the Group’s overall operating results.
Despite cyclone-related disruption to cultivation cycles, the Group delivered a strong operating performance, with EBITDA and operating profit (EBIT) both recording year-on-year growth. Operating profit (EBIT) closed at Rs. 9.67 billion, compared to Rs. 8.62 billion in the corresponding period of the previous year, reflecting the strength of the Group’s diversified portfolio and disciplined cost management.
During the period in review, key Group businesses across the five industry sectors, namely Crop Solutions, Agri Produce, Livestock Solutions, Industrial Solutions, and Health & Personal Care, continued to perform resiliently. Crop Solutions revenue increased from Rs. 28.06 billion to Rs. 32.32 billion, while Livestock Solutions revenue grew from Rs. 13.35 billion to Rs. 14.60 billion. Health & Personal Care revenue improved from Rs. 14.29 billion to Rs. 14.46 billion, supported by herbal health product exports and steady domestic demand. Revenue from Agri Produce increased from Rs. 4.35 billion to Rs. 4.64 billion, while Industrial Solutions revenue rose from Rs. 6.07 billion to Rs. 6.28 billion.
Commenting on the performance, CIC Holdings Group CEO Aroshan Seresinhe said, “Despite the disruption caused by Cyclone Ditwah to agricultural activity during the Maha season, the Group remained focused on supporting farming communities through well clean-up operations, field renovation, and the restoration of cultivation activity.
CSE trading reflected a bullish trend yesterday due to positive quarterly corporate earnings coupled with lower Treasury Bill yields, market analysts said.
Further, institutional participation contributed more than 50 percent to the day’s turnover.
Amid those developments both indices moved upwards. The All Share Price Index went up by 63.67 points, while the S and P SL20 rose by 12.58 points.
Turnover stood at Rs 11.1 billion with10 crossings. The top seven crossings were: JKH 189.5 million shares crossed to the tune of Rs 4.2 billion; its shares traded at Rs 22.70, HNB 3.5 million shares crossed for Rs 1.48 billion; its shares traded at Rs 422, Hemas Holdings 11 million shares crossed for Rs 376.2 million; its shares traded at Rs 34 20, Commercial Bank 1.5 million shares crossed for Rs 336.8 million; its shares traded at Rs 224.50, Sampath Bank 600,000 shares crossed for Rs 93.6 million; its shares sold at Rs 156, Laugfs Gas 868,000 shares crossed for Rs 51.6 million; its shares sold at Rs 71 and Sierra Cables 1 million shares crossed for Rs 36.7 million; its shares sold at Rs 36.70.
In the retail market top seven companies that mainly contributed to the turnover were; Ceylon Land Equity Rs 385 million (20 million shares traded), Commercial Bank Rs 373.9 million (1.7 million shares traded), Luminex Rs 247.2 million (26.7 million shares traded), Colombo Dockyard Rs 152 million (one million shares traded), TJ Lanka Rs 152 million (four million shares traded), Easter Merchants Rs 142 million (8.7 million shares traded) and RIL Properties Rs 116.9 million. During the day 441.3 million share volumes changed hands in 44406 transactions.
It is said that manufacturing sector counters, especially JKH, led the market while the banking sector also performed well, especially HNB and Sampath Bank. Further, the capital goods sector too performed well.Yesterday the Central Bank’s US dollar buying rate was Rs 305.78 and selling rate Rs 313.32.
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