By: Staff Writer

July 25, Colombo (LNW): Sri Lanka has taken a bold step towards the implementation of a national digital identity system by engaging India’s National Institute for Smart Government (NISG) to oversee the roll out of its electronic National Identity Card (eNIC) project.

The program under the Sri Lanka Unique Digital Identity (SL-UDI) project by the Ministry of Digital Economy follows the Modular Open-Source Identity Platform (MOSIP), an internationally recognised open-source platform developed in India.

The project will provide a secure, verifiable digital identity to every citizen to enhance public service access, governance, and anti-fraud.a high official of the Ministry of D9giotal economy disclosed. .

The Sri Lankan Government, jointly with NISG, issued a Request for Proposals (RFP) near the end of June 2025 inviting an Indian Master Systems Integrator to create and deploy the eNIC system.

NISG, which has played a key role in India’s Aadhaar initiative and other big e-governance initiatives, will handle the selection and technical integration task.

The selected Indian integrator will be responsible for: deploying biometric enrollment and authentication systems, integrating MOSIP with Sri Lanka’s existing digital infrastructure and conducting pilot programs and onboarding the initial population

However, Chief Advisor to the President on Digital Economy, Hans Wijesuriya emphasised that while India will assist in the system setup, all biometric and personal data will remain fully under Sri Lanka’s control. Data will be hosted on local servers, with no foreign access or external data transfers permitted.

MOSIP, industrialised by the International Institute of Information Technology, Bangalore (IIIT-B), is being used in several countries such as Morocco, the Philippines, and Ethiopia. MOSIP provides a modular and secure identity management system with open Application Programming Interfaces, (APIs ) and strong privacy safeguards.

The partnership with NISG is reflective of a deepening of Indo-Lanka digital ties and is seen as a strategic balancing of geopolitical influence by Sri Lanka while promoting its digitalization. It also offers a low-cost, transparent, and scalable solution to create a foundational identity system aligned with global best practices.

The RFP deadline is August 5, 2025, and implementation of the project is expected to commence by the end of the year. The eNIC, when fully rolled out, will enable access to public services, e-banking, welfare schemes, and eventually be a key enabler of Sri Lanka’s digital economy strategy.

By: Staff Writer

July 25, Colombo (LNW): In a decisive move to align with global tax trends and expand its fiscal net, Sri Lanka will begin imposing an 18% Value Added Tax (VAT) on non-resident digital service providers from October 1, 2025. The Inland Revenue Department (IRD), under the Value Added Tax (Amendment) Act No. 04 of 2025, has mandated that foreign entities supplying digital services to Sri Lankan consumers must register, collect, and remit VAT to local authorities.

This landmark decision represents a strategic effort to modernize Sri Lanka’s tax base by targeting the fast-growing digital economy. The regulation applies specifically to business-to-consumer (B2C) transactions and covers a broad spectrum of digital services including cloud computing, software-as-a-service (SaaS), e-commerce platforms, streaming services, online marketing, gaming, social media, fintech, blockchain, and NFTs.

Non-resident providers must register for VAT if their turnover from Sri Lankan consumers exceeds Rs. 60 million annually or Rs. 15 million in any three-month period. The relatively low threshold is likely to bring a considerable number of foreign digital operators into the Sri Lankan tax net, including mid-sized players and niche service providers.

The financial burden of the new VAT regime is expected to be passed on to consumers, effectively raising the cost of digital services for Sri Lankans. This could dampen digital consumption or encourage unofficial workarounds among cost-sensitive users. Service providers, meanwhile, will have to overhaul their billing and accounting systems to comply with Sri Lanka’s VAT requirements, including quarterly electronic tax filings and five-year record retention.

While the system grants the IRD power to impose penalties and potentially restrict or blacklist non-compliant providers, enforcing compliance against entities without a physical presence in Sri Lanka may prove difficult. The success of the regime largely hinges on voluntary compliance by overseas platforms, which must obtain a local Taxpayer Identification Number (TIN) and register via an online portal.

Moreover, collecting taxes from tech giants and smaller digital firms alike introduces complexities, especially where foreign currency exchange and cross-border transactions are involved. The enforcement challenge is compounded by the lack of clear dispute resolution mechanisms for disagreements involving non-resident providers.

Despite these hurdles, Sri Lanka’s move is in line with global efforts by countries such as India, Australia, and members of the EU, which have implemented similar digital service tax regimes to capture revenue from tech-driven global commerce.

As digital services become increasingly integrated into everyday life, this VAT expansion marks a significant step in ensuring that international service providers contribute their fair share to the domestic tax system. However, effective administration and stakeholder cooperation will be key to its long-term success.

By: Staff Writer

July 25, Colombo (LNW):Sri Lanka’s vehicle market has witnessed a dramatic transformation just months after the government lifted the long-standing vehicle import ban in February 2025, with electric vehicles (EVs) and brand-new Chinese cars now dominating new imports.

Data from Sri Lanka Customs reveals that over 14,000 vehicles have entered the country since the ban was eased, generating approximately Rs. 165 billion in tax revenue. However, contrary to widespread expectations, the influx is not led by used Japanese vehicles, but rather by electric vehicles—particularly those from Chinese automakers such as BYD and MG—and new, affordable Chinese gasoline vehicles.

While Japanese reconditioned vehicles like the Toyota Prius and Vitz were once the top choice for Sri Lankan buyers, many car dealers say consumer preferences are rapidly shifting. “Earlier, people would ask for five-year-old Japanese models. Now they ask about battery life and EV charging times,” a Colombo-based car dealer noted.

The Central Bank of Sri Lanka (CBSL) recently revised its loan-to-value (LTV) ratios for vehicle financing, which indirectly impacts the EV market. Although not directly targeted, EV buyers may face stricter borrowing limits, reducing the affordability and accessibility of electric vehicles for some segments of the population.

Adding to this shift, brand-new Chinese vehicles are attracting buyers with their sleek designs, modern technology, and competitive pricing. These new entrants are capturing significant market share and challenging the dominance once held by Japanese used car imports.

However, the Vehicle Importers Association Lanka (VIAL) has issued a warning for buyers rushing to purchase electric vehicles. VIAL President Indika Sampath Merenchige cautioned that many Chinese EV models being imported have depreciated significantly in value—by as much as Rs. 2 to 3 million—shortly after purchase. He advised consumers to do their research and stick to well-established EV brands when possible.

Meanwhile, the traditional market for used Japanese cars is faltering. A recent shipment of 196 used Japanese vehicles, including popular models like the Toyota Land Cruiser and Hilux, cleared in March, but many remain unsold. Dealers suggest that the local market’s growing preference for EVs and newer models is leaving them with unsold inventory.

According to the VIAL, around 75 percent of the first 7,000 vehicles imported after the ban were sold, though it is unclear what portion were used Japanese cars.

With evolving consumer preferences, a surge in EV imports, and increased competition from Chinese manufacturers, Sri Lanka’s vehicle market is undergoing a significant realignment, signaling a new era in automotive buying behavior.

By: Staff Writer

July 25, Colombo (LNW): The long-delayed expansion of the Jaya Container Terminal (JCT) at the Port of Colombo is now gaining momentum, with the government reinvigorating state mechanisms and streamlining bureaucratic processes to fast-track the project. The upgrade aims to boost the terminal’s capacity and strengthen its competitiveness in regional maritime trade.

The Sri Lanka Ports Authority (SLPA), which is spearheading the project, has initiated the extension of the existing 1,260-meter berth by an additional 120 meters. Once completed, the total berth length will reach 1,380 meters, enabling the terminal to simultaneously accommodate two vessels each up to 360 meters in length—an upgrade that is expected to significantly improve operational efficiency.

In addition to berth extension, a 40,000-square-meter (approximately 4 hectares) yard is being developed to handle increased container traffic. Plans also include expanding the container yard by 13 acres and installing three new gantry cranes, which will complement the terminal’s current 14 gantry cranes.

These developments are projected to increase the JCT’s annual handling capacity from the current 2 million Twenty-Foot Equivalent Units (TEUs) to 3 million TEUs, according to SLPA estimates.

The latest construction work on the JCT-V Yard has been awarded to Maga Engineering Ltd under a Rs. 650.9 million contract. Cabinet approval was recently granted to develop the yard area to meet growing logistical needs. Nine bids were received for the tender, with Maga Engineering emerging as the top bidder based on recommendations by both the Tender Evaluation and High-Level Procurement Committees.

Initially approved in July 2017, the terminal expansion also involved deepening the basin to 15 meters. An agreement between SLPA and the original contractor was signed on November 29, 2018, at an estimated cost of Rs. 5.04 billion (excluding VAT). However, procedural delays stalled the project, with no official commencement notice issued within the agreed seven-day window.

The project was later revised in September 2020, pushing the start date to November 23, 2020. Despite this rescheduling, only 82.6% of the work had been completed by the end of 2023, well past the original July 2020 deadline, as revealed by a recent National Audit Office report. The overall cost has since ballooned to Rs. 10 billion.

A senior official from the Ministry of Ports and Aviation confirmed that while the official inauguration was scheduled for June 2024 under the previous administration, construction is now nearing completion. The prolonged delays were largely attributed to political instability and administrative changes during election periods.