July 10, Colombo (LNW): Sri Lanka has taken a landmark step in reshaping its research and development (R&D) landscape with the formation of a dedicated national committee to identify and prioritise the country’s most pressing research needs.

In what marks the first initiative of its kind, the newly formed body is tasked with evaluating and categorising research efforts across the nation in alignment with long-term development goals and national interests. The move is intended to bring coherence and strategic direction to a sector long criticised for its disjointed and piecemeal approach.

The committee is jointly led by Professor Gomika Udugamasooriya, Senior Advisor to the President on Science and Technology, and Professor Rohan Fernando, Chairman of the National Science and Technology Commission. A team of 20 experts from a range of disciplines will support this effort, ensuring broad representation across scientific, academic, industrial, and policy-making spheres.

According to the President’s Media Division (PMD), a key focus will be aligning the R&D strategies of universities, public institutions, industries, and government bodies with the country’s development agenda. Another crucial aim is to guide the allocation of public funds for R&D in a way that maximises impact, relevance, and accountability.

Historically, Sri Lanka’s research sector has functioned in silos, often disconnected from real-world application and national progress. This fragmented structure has limited its contribution to both economic growth and social development.

The establishment of the committee signals a shift towards evidence-based policymaking. Data collection will extend from local institutions to national surveys, allowing decisions to be informed by a comprehensive understanding of ground realities.

Ultimately, the government hopes this structured, priority-led approach will help transform the sector into a more effective, responsive, and impactful force for national advancement.

July 10, Colombo (LNW): In a move set to shake international trade relations, Sri Lanka has been named amongst a group of countries targeted by the United States for newly imposed tariffs.

The announcement, made by US President Donald Trump on his social media platform, outlined a fresh series of trade penalties that will come into force on August 01.

The new tariffs, part of a broader economic push by the White House, will see Sri Lankan exports to the US subjected to a 30 per cent duty—the highest tier applied in this round. Iraq, Algeria, and Libya also face the same rate, while the Philippines, Brunei, and Moldova are slated for slightly lower levies at 25 per cent.

Trump personally issued formal notices to the respective heads of state, confirming the measures, and signalled further action may be imminent. He indicated that more countries would soon be added to the growing list, stating online that additional announcements were expected the same day.

This escalation follows on the heels of an earlier round of tariffs introduced just days prior, affecting imports from 14 other nations, including major Asian economies such as Bangladesh, South Korea, and Japan. Rates in that batch reached as high as 40 per cent.

Sri Lanka’s inclusion underscores the widening scope of the US president’s increasingly protectionist trade policy, which had paused temporarily following a turbulent market response. That 90-day hiatus, which began in April following the declaration of what Trump called “Liberation Day,” officially ends this week.

During the pause, the US administration managed to conclude trade arrangements with a limited number of partners, including the UK and Vietnam, while negotiating a short-term agreement with China to ease some of the more severe restrictions.

Despite earlier uncertainty, Trump has now confirmed that the new tariffs will take effect on schedule, with no further delays or exemptions planned. As the August implementation date nears, affected countries—including Sri Lanka—face mounting pressure to respond amid increasing volatility in global trade.

July 10, Colombo (LNW): Several spells of showers will occur in the Western and Sabaragamuwa provinces and in Kandy, Nuwara-Eliya, Galle and Matara districts. A few showers may occur in the North-western province.

Showers or thundershowers may occur at a few places in Uva and Eastern provinces and in Mullaittivu district during the afternoon or night.

Fairly strong winds of about (30-40) kmph can be expected at times over Western slopes of the central hills and in Southern province.

The general public is kindly requested to take adequate precautions to minimise damages caused by temporary localised strong winds and lightning during thundershowers.

Marine Weather:

Condition of Rain:

Showers will occur at several places in the sea areas off the coast extending from Chilaw to Matara via Colombo and Galle.

Winds:

Winds will be Westerly to South-westerly and wind speed will be (30-40) kmph.

Wind speed can increase up to (50-55) kmph at times in the sea areas off the coast extending from Puttalam to Pottuvil via Colombo, Galle, and Hambantota.

Wind speed can increase up to 45 kmph at times in the sea areas off the coast extending from Puttalam to Trincomalee via Mannar and Kankasanthurai.

State of Sea:

The sea areas off the coast extending from Puttalam to Pottuvil via Colombo, Galle, and Hambantota will be rough at times.
The sea areas off the coast extending from Puttalam to Trincomalee via Mannar and Kankasanthurai will be fairly rough at times.

The wave height (about 2.5 – 3.0 m) may increase in the sea areas off the coast extending from Puttalam to Pottuvil via Colombo, Galle and Hambantota (this is not for land area).

Naval and fishing communities are requested to be vigilant in this regard.

ECONOMYNEXT – Sri Lanka businessman Kulappu Arachchige Don Dhammika Perera has bought 106.9 million shares of East West Properties PLC for 3.2 billion rupees.

This is approximately 77.40 percent of the issued shares of the company.

Perera bought 106,991,848 shares at 30.20 each, according a stock exchange filing.

The stock closed at 31.80 rupees. 

East West Properties operates over 100,000 square feet of warehousing space and 30,000 square feet of commercial office space. 

The company owns several properties including 32 apartments at Crescat Residences. 

The Colombo Magistrate’s Court has granted bail to four suspects, including former Department of Motor Traffic (DMT) Commissioner General Nishantha Anuruddha Weerasinghe, who were arrested over the alleged illegal registration of a vehicle without proper clearance from Sri Lanka Customs.

Colombo Chief Magistrate Thanuja Lakmali Jayatunga delivered the ruling after reviewing submissions made by both the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) and the defense.

According to the court order, three suspects were released on two sureties of Rs. 1 million each, while the fourth suspect was granted bail on a surety of Rs. 500,000. In addition to bail, the Magistrate imposed a travel ban on all four suspects and instructed them to surrender their passports to the court.

The case has been scheduled for further hearing on November 14. The suspects are facing charges related to the unlawful issuance of registration documents for a luxury vehicle, which allegedly caused a financial loss to the state and violated standard Customs and registration procedures.

The Inland Revenue Department (IRD) has launched a series of criminal investigations into persistent tax evasion cases, particularly focusing on Value Added Tax (VAT) defaulters. This crackdown, aligned with recommendations from the International Monetary Fund (IMF) and global anti-money laundering and counter-terrorist financing commitments, marks a significant move toward tightening tax compliance and enhancing state revenue.

Finance Ministry officials confirmed that recovery proceedings have already begun to confiscate assets of defaulters, including directors of five companies who collectively owe Rs. 4.3 billion in unpaid VAT. The IRD is now investigating properties and other holdings of these individuals to reclaim the outstanding dues.

Among the major defaulters is Mendis & Company, with directors Arjuna Aloysius and Anthony John evading nearly Rs. 4 billion—the largest amount recorded in the crackdown. Other notable cases include K.A. Geetha Prasanga, currently serving a prison sentence for evading Rs. 46.6 million, and Samaranayake & Company, whose directors owe more than Rs. 233 million. The company’s appeal is under judicial consideration, and bail has been granted under court-imposed conditions.

While enforcement measures intensify, the IRD has also seen positive compliance. Companies like Vijitha Enterprises and North Sea Company have fully settled their dues of Rs. 32.5 million and Rs. 66.1 million, respectively.

To reinforce its operations, the IRD has established a Financial Intelligence Unit (FIU) to monitor financial flows and combat fraud, along with an Internal Affairs Unit (IAU) and a Complaints Management and Investigation Division to strengthen internal governance and transparency.

Sri Lanka’s VAT reforms, which came into effect on January 1, 2024, have significantly bolstered government revenue. VAT collections rose by 88.6% in 2024, reaching a record Rs. 1.3 trillion—up from Rs. 694.5 billion in 2023—and surpassing income tax for the first time. However, the full impact of VAT on imports remains unrealized due to ongoing import restrictions throughout 2024.

The number of registered VAT-paying entities rose sharply from 14,128 in 2023 to 21,542 in 2024—a 52.5% increase. As of February 2025, this figure had reached 22,043, signaling an expanding tax base and improved compliance, especially within the financial services sector.

Further reforms are on the horizon. A VAT compliance program is currently underway to support the transition to mandatory e-filing by July 1, 2025. This precedes the formal repeal of the Simplified VAT (SVAT) system on October 1, 2025. In tandem, a broader income tax compliance initiative has been introduced to manage the surge in newly registered taxpayers since 2024.

A senior IRD official reiterated the government’s unwavering commitment to combating tax evasion, noting the formation of a special task force to identify and prosecute non-compliant individuals and corporations.

Despite imprisonment in some cases, the IRD affirms that tax liabilities must still be fully recovered, emphasizing that prior incarceration does not exempt defaulters from financial accountability.

In a major shift toward progressive taxation, the Sri Lankan government is preparing to implement sweeping reforms to its tax system that will place a greater burden on wealth and property, aligning with International Monetary Fund (IMF) recommendations. The move is aimed at easing pressure on lower-income citizens and improving revenue collection from high-income earners.

According to the IMF’s Fourth Review under the Extended Fund Facility (EFF), the government has committed to introducing a range of wealth and property-related taxes, with the goal of strengthening fiscal stability and fostering economic equity. These measures include a property tax expected by mid-2027, a wealth transfer tax, and a reformed capital gains tax regime.

Central to these reforms is the introduction of an Imputed Rental Income Tax (IRIT) by 2025, which will apply to residential properties exceeding a specific value threshold. The IMF also recommends replacing the current exemption for the sale of a first home with a value-based threshold, broadening the tax base.

Another key element is the revamp of the capital gains tax (CGT). The IMF proposes removing the existing CGT exemption for listed companies and revising value-added tax (VAT) treatment for owner-occupied housing. This would include taxing the first sale of residential properties and harmonizing the tax structure with international norms.

To support local government finances, property taxes at the municipal and provincial levels will also be updated. The outdated annual value (AV) assessment method will be replaced with more responsive and market-based valuations. A gradual approach will be adopted to prevent excessive tax burdens, and hardship relief mechanisms will be introduced for vulnerable property owners.

As part of the 2025 national budget proposals, the government also plans to raise stamp duties on land leases and introduce a new electricity usage tax. These measures are intended to expand the revenue base while promoting greater fiscal autonomy for local authorities.

To facilitate accurate and fair tax assessments, Sri Lanka is developing a national property database supported by a digital Sales Price and Rents Register (SPRR). This system will collect and digitize valuation data starting with records from Municipal Councils. The first phase of digitization is expected to be completed by the end of 2025.

The final SPRR, essential for determining property values and implementing various taxes, is due to be fully operational by September 2025. It will feed into the broader property database, scheduled for completion by June 2026. By September 2026, the Inland Revenue Department, Valuation Department, Land Registry, and the general public will have access to this comprehensive system.

This strategy, endorsed in a letter of intent sent to IMF Managing Director Kristalina Georgieva, underscores the government’s intention to shift more tax responsibility to high-net-worth individuals. The broader objective is to create a fairer, more transparent tax system that enables better-targeted welfare programs and supports long-term economic resilience.

The Colombo-based think tank Advocata Institute has called on the Sri Lankan government to reform its e-commerce tax and customs framework, urging authorities to adopt globally accepted practices such as exempting low-value imports and enabling online platforms to collect taxes at the point of sale.

 The appeal comes amid mounting public frustration over recent delays and complications in parcel clearance, especially for goods ordered from platforms like AliExpress.

Advocata criticized the recent changes at Sri Lanka Customs, which now require individual declaration of each parcel using Harmonized System (HS) codes, a move that has resulted in massive backlogs and disrupted the previously smooth process of small-parcel clearance. Traditionally, Sri Lanka Customs had used a weight-based clearance method for e-commerce items.

Globally, many countries adopt a “de minimis” threshold—where low-value goods, usually under USD 150, are exempt from import duties. The U.S. has a generous threshold of USD 800 per shipment.

While VAT is still charged, customs duties are waived to streamline trade and reduce administrative burden. Sri Lanka, however, has not implemented such a system and continues to levy multiple border taxes including Import Duty, CESS, and the Port and Airport Levy (PAL), making the system unnecessarily complex and opaque.

“The current system is unmanageable,” Advocata warned, pointing out that customs officers are overwhelmed and small and medium enterprises (SMEs) suffer delays in sourcing vital inputs from international suppliers. The new HS code requirement for every small parcel makes cross-border e-commerce inefficient and unsustainable, the think tank argued.

Advocata also proposed a Vendor Collection Model, already used by countries like Singapore and Australia, where e-commerce platforms collect and remit taxes at the point of sale. This model improves compliance and reduces pressure on customs while offering fairer treatment to consumers.

 They suggested exempting parcels below USD 75 under a clear de minimis threshold and mandating only large-scale platforms to register and remit taxes locally or through appointed agents.

“This approach protects consumer choice, ensures fair competition, and secures revenue for the state,” Advocata emphasized.

Meanwhile, addressing confusion about Value Added Tax (VAT) on digital services, State Finance Minister Anil Jayantha clarified that no new tax has been introduced. He explained that the VAT inclusion for digital services—such as those offered by foreign platforms like Uber—was proposed and passed in the 2025 Budget.

“There’s been misleading media coverage suggesting an 18% VAT will be newly imposed from October 1. This is entirely inaccurate,” Jayantha stated. He said that VAT collection on digital services was legally approved months ago, and delays in implementation were due to procedural formalities, including gazette publication and legal amendments.

He emphasized that the tax is not new, but merely brings previously exempted digital services into the existing VAT net to ensure fairness in revenue generation. “Digital services, regardless of whether they’re domestic or foreign, are subject to VAT as per the amended law. There is no cause for panic,” he added.

Sri Lanka has also faced criticism from the International Monetary Fund (IMF) for its restrictive trade practices, including taxing credit card payments for online purchases. Critics argue that such protectionist measures fuel corruption and limit consumer access to affordable goods, even resulting in instances where food is smuggled due to excessive taxes.

Advocata urged authorities to modernize the legal and tax frameworks to better accommodate the growing importance of cross-border e-commerce and digital services, both to boost consumer welfare and secure state revenue in a fair and efficient manner.

Prime Minister Dr. Harini Amarasuriya underscored the importance of ensuring that every Sri Lankan citizen can access essential public services in their mother tongue and sign language, aligning with the Government’s policy vision of “A Prosperous Country – A Beautiful Life.”

She made these remarks at the closing ceremony of National Languages Week, themed “Path to Reconciliation,”held on Monday (July 7) at the Sri Lanka Foundation Institute, organised by the Justice and National Integration Ministry.

The National Languages Week, observed from July 1 to July 7 under the theme “Talk Together – Live Together,”aimed to promote linguistic harmony, mutual respect, and national unity. The final event was attended by Justice and National Integration Minister Harshana Nanayakkara, as well as officials, diplomats, and students.

In her address, Prime Minister Amarasuriya said:

“Language is not just a tool for communication but a symbol of identity and dignity. National language policies must go beyond rhetoric and ensure that courts, police stations, hospitals, schools, and public offices are inclusive environments where all citizens can express themselves and receive services in the language they are most comfortable in.”

She stressed that failing to provide such access could make people feel excluded or marginalised, turning a service delivery issue into a deeper societal concern.

“Creating schools where Sinhala and Tamil students learn each other’s languages, hospitals where patients are treated respectfully in their own language, and a justice system accessible to all – these are not luxuries, but necessities in a truly reconciled and harmonious society.”

The Prime Minister also announced that the 2026 education reforms will focus on the integration of all national languages into mainstream education, treating language learning as a core value, not merely an academic subject.

Justice and National Integration Minister Harshana Nanayakkara, in his remarks, emphasised unity:

“While we may have come from different pasts, we all share a common future. Let us build a Sri Lanka grounded in genuine reconciliation and unity.”

At the event, the Prime Minister awarded certificates to schoolchildren who won essay competitions and to individuals who passed the National Language Proficiency Examinations, organised by the Official Languages Commission and the Official Languages Department.

Dignitaries present included the High Commissioners of Canada and Bangladesh, Deputy Minister Muneer Mulaffar, Justice Ministry Secretary PC Ayesha Jinadasa, and Prime Minister’s Secretary Pradeep Saputhanthri, among others.