The Hon. (Dr.) Harshana Suriyapperuma - Deputy Minister of Finance and Planning

¶ 01 Mr. Speaker, the responses are as follows:

¶ 02 1. In line with agreed procedures with the IMF and structural benchmarks, electricity pricing is to be on a cost-recovery basis. Future revisions will also follow a cost-recovery pricing mechanism. The CEB is conducting the necessary calculations to determine the tariff methodology for the next revision. Based on that information, the independent PUCSL will proceed as per the established process and announce its decision.

¶ 03 2. As noted above, since the CEB’s work is underway, the specific impacts by consumption brackets do not arise at this stage.

¶ 04 3. On SVAT replacement, a new risk-based refund mechanism is being formulated, as outlined during the Budget Debate. Taxpayers will be risk-categorized—low, medium, high—and refunds processed accordingly. The IRD is working to clear refund backlogs. Delays have also occurred due to incomplete documentation by some taxpayers; they are being notified. To strengthen capacity and expedite processing, the IRD has commenced procurement for technical resources and plans to recruit 100 staff in 2025 and 200 officers in 2026.

¶ 05 4. Eligible exporters who file returns and claim refunds will be paid within 45 days from the due date of filing. For qualification, a taxpayer whose exports exceed 50% of total supplies will be recognized as an eligible exporter; thus SMEs that meet the contribution threshold will qualify. This selection will be conducted quarterly, and the design also incentivizes raising the export share above 50%.

¶ 06 5. Digital services: Under the Value Added Tax (Amendment) Act, No. 4 of 2025, the VAT base is expanded to include electronic/digital services supplied through digital platforms to consumers in Sri Lanka by non-residents, effective 1 June 2025. Since VAT is ultimately borne by the Sri Lankan consumer, and given the rapid evolution of the global digital economy, applying VAT to cross-border digital services is fair and neutral, ensuring domestic suppliers are not disadvantaged. Registration, payment and compliance procedures for non-resident suppliers/platforms will be specified by the Commissioner General of Inland Revenue in due course. Definitions of “digital platform”, “fixed establishment”, and “non-resident person” have been provided in law. A list of principal services subject to this tax is tabled.

¶ 07 6. Senior citizens: A special fixed deposit scheme for senior citizens will be implemented from 1 July 2025 to 31 December 2025. Fixed deposits of 12 months opened during this period by senior citizens will be eligible. The maximum aggregate deposit per senior citizen across participating banks is Rs. 1.5 million. An annual additional interest of 3% over the published Weighted Average Prime Deposit Rate (WAPDR) will be paid to assist with essential expenses (e.g., health). Rs. 15 billion has been allocated in the Budget to fund the additional interest, to be implemented via selected State banks.

¶ 08 7. Withholding tax (WHT): Since 1 January 2023, WHT of 5% applied to all interest. From 1 April 2025, WHT on interest has been notified at 10%. Under the law, minors are treated like any other person for income tax purposes. Thus, up to 31 March 2025, minors’ interest was subject to 5% WHT. The IRD has prepared a process for income tax refunds, including for minors where over-withholding occurs. Further, from 1 April 2025, guardians of minors may file a self-declaration with banks/financial institutions to obtain exemption relief from WHT where applicable. Circulars and procedures are published on the IRD website.

¶ 09 8. TIN issuance: Facilities are available to obtain a TIN through e-services. Those unable to apply online may submit an application at any regional office. Additionally, to expedite issuance, a bulk forced registration process is in operation using existing institutional data. Using all methods, about 10 million TINs have been issued to date, and issuance continues.