February 18, Colombo (LNW): BDO Partners, a leading professional services firm, has provided its response to the 2025 budget presented by President Anura Kumara Dissanayake.
The firm acknowledges the government’s efforts to balance economic growth with social welfare whilst advancing debt restructuring efforts supported by the International Monetary Fund (IMF).
BDO Partners recognises the government’s projected total expenditure of Rs. 4,218 billion (excluding debt servicing) and appreciates the focus on public services, infrastructure, and social welfare.
The firm supports the administration’s commitment to fostering a market-driven economy, ensuring a competitive market structure, and regulating excessive market power concentration.
Regarding tax reforms, BDO Partners notes the significant modifications to the Value Added Tax (VAT) system, including the shift from the Simplified Value Added Tax (SVAT) to a risk-based refund scheme.
The firm highlights the inclusion of digital services under VAT regulations and the mandatory adoption of Point of Sale (POS) machines for VAT-registered entities as key steps towards strengthening compliance.
BDO Partners welcomes the increase in the personal income tax threshold from Rs. 100,000 to Rs. 150,000 per month and the expansion of the first tax band taxed at 6 per cent.
However, the firm acknowledges concerns over the capital gains tax increase from 10 per cent to 15 per cent, which could pose additional burdens on individuals and partnerships.
The firm also appreciates the government’s targeted social welfare initiatives, particularly the extended exemptions under the Social Security Contribution Levy for petroleum products and international trade-related transportation.
Additionally, the firm’s analysis indicates that tax increases on the betting and gaming industry, including a rise in the Gross Collection Levy from 15 per cent to 18 per cent, will have financial implications for the sector.
In terms of economic modernisation, BDO Partners supports the government’s initiatives to digitise Sri Lanka’s economy, particularly the introduction of a unique digital identification system and the transition towards a cashless economy.
The firm views the projected digital economy growth of US$ 15 billion over five years as an ambitious yet achievable target.
BDO Partners commends the investment in tourism infrastructure, including the Rs. 500 million allocation for a city branding campaign and improvements at Bandaranaike International Airport.
The firm also appreciates the proposed development bank for small and medium enterprises (SMEs), the strengthening of research and development funding, and the rationalisation of state agencies to improve efficiency.
On education, BDO Partners acknowledges the Rs. 135 billion investment in university education and school infrastructure, as well as the planned expansion of scholarships.
The firm supports the government’s commitment to healthcare, particularly the Rs. 604 billion allocation, digitalisation of the National Medicines Regulatory Authority, and enhanced primary healthcare services.
BDO Partners also highlights the importance of food security and agriculture, welcoming the Rs. 35 billion fertiliser subsidy and investment in crop production.
The firm supports regulatory reforms aimed at stabilising the paddy and rice market and encourages private investment in underutilised land to boost agricultural output.
Overall, BDO Partners views the 2025 budget as a comprehensive effort to address Sri Lanka’s economic challenges whilst laying a foundation for long-term stability.
The firm emphasises that the success of these initiatives will depend on effective implementation, strong governance, and the ability to navigate global and domestic economic uncertainties.
Full Report: https://lankanewsweb.net/wp-content/uploads/2025/02/BDO-Budget-Overview-2025.pdf
