A few showers may occur in Western, Sabaragamuwa and Northern provinces and in Galle, Matara, Kandy, and Nuwara-Eliya districts.Showers or thundershowers may occur at a few places in Uva, eastern and Northcentral provinces after 2.00 p.m.

Mainly fair weather will prevail elsewhere of the island.

The sun is going to be directly over the latitudes of Sri Lanka during 28th of August to 07th of September due to its apparent southward relative motion. The nearest places of Sri Lanka over which the sun is overhead today (06) are Ahungalla, Elpitiya, Amugoda, Thawalama, Deniyaya, Urubokka, Embilipitiya, Suriyawewa, Beralihela and Galkaduwa about 12.08 noon.

Sri Lanka has decided to defer the implementation of its controversial 18% Value Added Tax (VAT) on digital services offered by non-resident companies, following pushback from global online platforms and travel service providers warning of possible withdrawal from the local market.

Originally slated to take effect from October 1, 2025, under the Value Added Tax (Amendment) Act No. 4 of 2025, the levy will now be introduced on April 1, 2026, Cabinet Spokesman Dr. Nalinda Jayatissa announced yesterday.

The tax targets international digital service providers offering services to Sri Lankan consumers, including Booking.com, Agoda, Expedia, Airbnb, Netflix, and Meta (Facebook and Instagram). Many of these firms, citing compliance difficulties and rising operational costs, have expressed concerns that the tax could make the Sri Lankan market less attractive. Some are reportedly reviewing their level of engagement, while smaller platforms have hinted at potential withdrawal if the policy is enforced without transitional measures.

According to industry insiders, Booking.com and Agoda have already flagged difficulties in integrating Sri Lanka’s VAT rules with their global billing systems, warning local hotel operators that additional costs may be passed on to end customers. Similarly, Airbnb is assessing whether compliance with the VAT regime is commercially viable given Sri Lanka’s relatively small market compared to regional tourism hubs.

For the travel and hospitality industry—currently on a revival trajectory after years of crisis—the move could not have come at a worse time. Tourist arrivals in 2025 have already surpassed 1.49 million by August, with the Government targeting 3 million visitors and USD 5 billion in revenue by year-end. Analysts warn that withdrawal or reduced engagement by global booking platforms would severely affect Sri Lanka’s international visibility and online accessibility.

Local hoteliers and tour operators fear that additional costs on digital services could ultimately be passed on to consumers, eroding competitiveness against regional rivals such as Thailand and Malaysia, where digital VAT regimes are either lower or more investor-friendly.

The Government, however, insists that the tax is necessary to ensure equity in revenue collection, arguing that domestic companies already bear VAT obligations while global digital giants earn significant profits without contributing to the Treasury. “The policy decision stands firm, but we are granting more time for non-resident providers to comply with VAT requirements,” Dr. Jayatissa said.

 While the deferral offers breathing space, stakeholders remain divided. Some welcome the delay as a chance to align systems and negotiate compromises, while others fear the looming deadline could still drive international service providers to scale back operations.

The next six months will be critical in determining whether Sri Lanka can balance much-needed revenue mobilisation with maintaining its appeal to international platforms vital for tourism, e-commerce, and digital connectivity.

A new study by the Institute of Policy Studies of Sri Lanka (IPS) has revealed that cigarette smuggling is widespread in the country, undermining both public health policies and government revenue collection. The report stresses the urgent need for stronger enforcement, digital tracking systems, and public participation to curb the illegal trade.

The study, titled “Tobacco Smuggling in Sri Lanka – A Scoping Study”, notes that despite high excise taxes imposed to discourage tobacco use, smuggling allows cigarettes to enter the market at significantly lower prices. This makes them more accessible to young people and low-income groups, eroding the effectiveness of anti-tobacco measures.

“Smuggled cigarettes bypass health warnings and taxes, making them cheaper and more dangerous,” said the study’s lead author, IPS Research Fellow Dr. Erandathie Pathiraja.

Co-authors Nishamini Ihalagedara and Ruwan Samaraweera added that the illegal trade not only heightens healthcare costs but also robs the state of badly needed revenue. “This is a double blow—the health sector bears the rising burden while the Treasury loses billions in potential income,” they noted.

The IPS report challenges the common view that higher cigarette taxes directly fuel smuggling. Analysis of customs seizure data shows no consistent correlation between excise tax hikes and volumes of seized contraband. Instead, factors such as corruption, gaps in enforcement, and porous borders play a more decisive role.

Sri Lanka’s tobacco industry is heavily taxed, with excise duties accounting for the bulk of cigarette prices. While taxation is seen as a key tool to reduce consumption, the IPS study cautions that weak enforcement leaves loopholes that smugglers exploit. The result is a parallel market that both undermines official policy and exposes vulnerable groups to unregulated products.

To address the problem, IPS draws on international best practices. Recommendations include introducing digital excise tax stamps to track products, offering incentives for public reporting of smuggling activities, and tightening border control measures. Greater transparency and stronger institutional coordination are also highlighted as priorities.

The report warns that unless decisive action is taken, Sri Lanka risks losing both the health and revenue battle against illegal tobacco. “Technology, enforcement, and public engagement must go hand in hand to tackle smuggling effectively,” the authors stressed.

IPS argues that the country cannot afford to overlook the issue, as unchecked cigarette smuggling threatens to undo years of progress in reducing tobacco use while simultaneously weakening fiscal stability.

Sri Lanka’s official reserve assets recorded a slight increase of 0.3 per cent in August 2025, rising to USD 6.166 billion from USD 6.147 billion in July, according to data released by the Central Bank of Sri Lanka (CBSL).

The first round of Political Consultations between Sri Lanka and Italy concluded yesterday (Sep 4) in Colombo, co-chaired by Deputy Minister of Foreign Affairs and Foreign Employment Arun Hemachandra and Italy’s Deputy Minister for Foreign Affairs and International Cooperation Maria Tripodi.

Prior to the discussions, the two Deputy Ministers signed a Memorandum of Understanding on the Establishment of a Political Consultations Mechanism, providing a formal and structured framework for dialogue between the two countries, the Ministry of Foreign Affairs, Foreign Employment and Tourism said.

During the consultations, both sides identified areas for expanded cooperation in workforce mobility, trade, investment, tourism, defence, energy, food security, culture, and education. They also discussed the recent revival of the Italy–Sri Lanka Parliamentary Friendship Association and explored ways to enhance inter-parliamentary collaboration.

Particular emphasis was placed on expediting the conclusion of pending bilateral instruments, including the Memorandum of Understanding on Migration and Mobility Partnership—aimed at ensuring safe and sustainable migration—and the renewal of the Agreement on Mutual Recognition of Driving Licences.

Deputy Minister Tripodi also met with Prime Minister Dr. Harini Amarasuriya and Foreign Affairs, Foreign Employment and Tourism Minister Vijitha Herath for further discussions. The Sri Lankan side expressed appreciation for Italy’s continued support to Sri Lankan migrant workers, while Tripodi in turn commended the contribution of Sri Lankan professionals in Italy, who now form the country’s 12th largest non-EU migrant labour force.

She assured that she would personally engage with Italian authorities at the highest level to expedite the renewal of key bilateral agreements.

This marks the first high-level Italian visit to Colombo since 2016. Italy is Sri Lanka’s fifth-largest export market and an important source of investment and tourism.

The Government has decided to launch a special project to conclude all pending investigations under the Office on Missing Persons (OMP) by the end of 2027, Cabinet Spokesman and Health and Mass Media Minister Dr. Nalinda Jayatissa announced yesterday.

The Cabinet of Ministers approved the initiative following a proposal presented by the Minister of Justice and National Integration. The project will see the appointment of 25 sub-committees comprising 75 qualified individuals, including retired judges, senior administrative officers, and lawyers.

Speaking at the weekly Cabinet press briefing, Minister Jayatissa noted that the OMP was established under Act No.14 of 2016, with its primary mandate being the investigation of cases of missing or disappeared persons and the issuance of reports to their families.

“Of the 16,966 complaints received by the OMP to date, 10,517 remain under investigation. To expedite the process, the Government will appoint 25 sub-committees consisting of 75 qualified individuals to ensure justice is delivered to the affected families,” the Minister said.