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Friday’s Budget: Tax net to be expanded
View(s):By Damith Wickremasekara
The annual budget for next year to be presented on Friday will have incentives for exporters and small and medium industries and relief on essential items while the government would introduce measures to expand the tax net by bringing in sectors that continue to evade tax payments.
A government source said that among the plans would be to raise the revenue targets from the Sri Lanka Customs, Inland Revenue Department and Excise Department by ensuring that tax collection is optimised. An estimated target of Rs 4.6 trillion is to be set to the three institutions marking an increase of about Rs 600 billion.
Keeping with International Monetary Fund (IMF) recommendations the government will also be introducing measures where they could increase Foreign Direct Investments and exports to raise foreign exchange. The government also conceded that that they were faced with difficulties in servicing foreign debt payments.
In order to avoid complications for the business sector and investors the government would be maintaining the same tax policies for the coming year, the source said.
The taxes imposed on vehicle imports too would remain unchanged
For the low income groups, the government would be introducing a relief package in the budget.
The budget will be presented by President Anura Kumara Dissanayake on Friday.
Meanwhile the Treasury had faced some difficulties earlier this year when servicing foreign debt payments due to a shortage of USD, but had to cushion it by obtaining USD from the Central Bank of Sri Lanka (CBSL) and USD 350 million of the fourth tranche from the International Monetary Fund.
According to the Mid-Year Fiscal Position Report- 2025 released by Treasury on Friday, total debt service payments from January 1 to June 30 in 2025 amounted to USD 1,358.9 million, of which USD 863.6 million was for principal repayments and the balance USD 495.3 million for the interest payments.
The report also observed that by end-June 2025, there were no external payment arrears.
The external debt of the government as of end June 2025 amounted to USD 37.1 billion. Multilateral debt accounts for 36 per cent of total government external debt, followed by commercial debt at 34 per cent and bilateral debt at 30 per cent.
Approximately 81 per cent of commercial debt comprised outstanding International Sovereign Bonds (ISBs) issuances, with the remainder consisting of foreign currency term financing facilities (syndicated loans), according to the report.
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