CA Sri Lanka seminar analyses 2026 Budget and calls for collective stewardship

The panel discussion in progress

• CA Sri Lanka seminar analyses 2026 Budget, hails progress and calls for collective stewardship

The much-anticipated Budget Seminar 2026, organised by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka), brought together leading voices in finance, policy, and taxation for a comprehensive analysis of the government’s fiscal plan. The event, held on 8 November, at the CA Sri Lanka Auditorium, highlighted the budget’s potential to drive sustainable economic recovery while fostering critical dialogue on key implementation challenges.

The seminar was graced by CA Sri Lanka President Heshana Kuruppu, Vice President Tishan Subasinghe, Council Members, and CEO Lakmali Priyangika. Faculty of Taxation Chairperson Sarah Afker, presented the Budget highlights, setting the stage for an engaging and insightful panel discussion moderated by Subasinghe.

The distinguished panel featured a cross-section of experts from the public and private sectors, including Finance Ministry Tax Policy Adviser Thanuja Perera, Inland Revenue Department (IRD) Senior Commissioner – International Tax Affairs and Legal A.M. Nafeel, Verité Research Executive Director Dr. Nishan De Mel, John Keells Group Head of Corporate Finance and Group Tax Nisreen Rehmanjee, and Brandix Group Managing Director Hasitha Premaratne fostering a rich dialogue on the Budget’s implications.

Kuruppu laid the foundation for an insightful session with a speech covering key aspects. He stated that a nation’s true strength is not measured solely by its resources, but by the resilience and integrity of its financial landscape. He explained that this landscape is the bedrock upon which investor confidence is built, social equity is delivered, and sustainable development is achieved.

Kuruppu acknowledged the country’s hard-earned progress, citing the recent debt rating upgrade as a milestone. He stressed that sustaining this achievement requires a national commitment to financial integrity, not just from the Government, but from all stakeholders.

He addressed the crucial role of the business community, stating, “To our colleagues in the corporate sector and professionals: your commitment to transparent financial reporting, robust governance, and ethical tax practices is not just a regulatory requirement; it is your vital contribution to national stability. When you uphold the highest standards, you build the trust that attracts investment, creates sustainable jobs, and fuels our collective recovery. You are stewards of the nation’s economic well-being as much as you are leaders of your organisations.”

Kuruppu emphasised that successful reform depends not only on strong legal frameworks like the Public Finance and Debt Management Acts, but also on building a skilled and empowered public finance workforce. He also underscored the role of digitisation in improving tax compliance and public service delivery, noting the accounting profession’s support for reducing cash transactions and accelerating digital integration to enhance transparency and broaden the tax base.

Dr. De Mel called for both the Treasury and the Central Bank of Sri Lanka to work together, as currently, fiscal policy is moving forward while monetary policy is holding it back.

He also said that recovery is slow and difficult. “Poverty has more than doubled, likely exceeding 30%. Real wages are 10–20% lower than eight years ago. Employment levels are the lowest in 20 years, only recently picking up. The benefits of fiscal recovery have not yet fully translated into improvements in people’s lives,” he said.

A significant portion of the discussion focused on the abolition of the SVAT scheme, a major concern for exporters and businesses, with Premaratne highlighted that the industry is not against the abolition in principle but is concerned about significant cash flow challenges due to potential delays in refunds. He welcomed the proposed national e-invoicing system, hoping it will digitise and streamline the VAT process, similar to efficient systems in countries like Singapore. He also emphasised that implementation is key and hopes the Government will follow through effectively. 

Rehmanjee echoed this, stating that the success of the new risk-based refund system hinges on implementation. “There is still discomfort with pre-audit refunds within the IRD. Clarity is needed on what moves a company from “low-risk” to “high-risk” and how that impacts cash flow,” she said, adding that regular disclosure from the IRD on refund releases is crucial for building confidence.

In response, Nafeel assured that the IRD has established two special export refund units to expedite refunds within the mandated 45 days. He explained the risk-based categorisation: eligible exporters will get import deferments, easing the major cash flow issue. Low and medium-risk taxpayers will get refunds without pre-verification. He added that the e-invoicing system and API integration with ERPs are being tested to further expedite the refund process.

Perera provided the policy rationale, stating that SVAT was always intended to be a temporary system. “With the new RAMIS system, a parallel mechanism was no longer necessary.” She said that the Government will monitor the data post-implementation to see if revenue increases and unnecessary refunds are reduced.

Perera outlined initiatives to boost investor confidence, including the Investment Protection Act, which aims to provide a stable, rule-based framework safeguarding investor agreements across Government transitions. She also reaffirmed the Government’s commitment to a “Single Window” digital platform integrating over 15 agencies, supported by significant investment in digital infrastructure.

Nafeel expressed confidence in achieving the government’s revenue targets, citing consistent performance improvements since 2019. He highlighted new revenue sources: “Imposing VAT and SSCL on imported fabric and coconut/palm oil and expanding the tax net by lowering the VAT/SSCL registration threshold from Rs. 60 million to Rs. 36 million per annum.”

This measure, however, drew criticism. Dr. De Mel argued that “Reducing the SSCL threshold was a mistake. Unlike VAT, SSCL is a cascading tax with no input credit, which increases costs for consumers and businesses.” He suggested that it would be more prudent to increase VAT and eliminate SSCL, or at the very least, set a much higher threshold for SSCL.

During the discussion, Rehmanjee also highlighted a systemic issue, noting that “95% of tax is collected via self-assessment, but a massive amount is under dispute, indicating a problem.” She emphasised the need for a tax ombudsman to address unfair practices, and to create a better experience for compliant taxpayers.