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Sri Lanka’s Inland Revenue Department faces critical structural hurdles that threaten to derail the sustainability of its recent tax administration gains unless institutional capacity is urgently rebuilt.

According to a July 2026 solution brief published by economic policy think tank Arutha Research in Colombo, state tax collection has rebounded remarkably to 16.7 percent of gross domestic product in 2025 from a low of 8.3 percent in 2021.

However, the report cautions that despite these revenue improvements, the state revenue body remains constrained by chronic staff shortages in specialized information technology, incomplete digitalization, and a heavy reliance on inefficient manual processes.

Structural challenges hindering long-term progress

Modernization efforts within the revenue body are being severely impeded by legacy operational practices and suboptimal resource allocation.

The policy brief highlights that the department continues to rely on broad traditional checking rather than modern risk-based compliance systems, while the Large Taxpayer Unit remains burdened by legal disputes from past assessments instead of focusing on active audits.

Furthermore, procedural bottlenecks persist across key administration areas, including unrecoverable tax arrears requiring write-offs, an uncleaned taxpayer registry following the 2023 expansion, and manual final-stage processing for Value Added Tax refunds that currently absorbs 40 full-time officers.

The think tank also criticized street-level business surveys in Colombo as resource-intensive distractions from large-scale evasion, warned against proposed taxpayer privilege schemes that could reward past non-compliance, and cautioned that expanding third-party data access without robust governance risks compromising taxpayer information security.

Positive milestones and institutional outlook

Despite these vulnerabilities, significant institutional improvements have taken root over the past two years, including enhanced staff morale, the recruitment of 100 officers in early 2026, leadership stability, upgraded digital infrastructure, and effective joint inter-agency investigations with the Customs Department.

Resolving these operational defects is essential to safeguarding Sri Lanka's fiscal trajectory and achieving the state target of raising government revenue to 20 percent of gross domestic product.

Broad administrative updates, policy evaluations, and capacity-building measures are expected to take center stage as fiscal authorities assess the think tank's strategic recommendations in the coming months.

India has officially notified a crucial amendment to its double taxation avoidance agreement with Sri Lanka to eliminate tax evasion and curb revenue leakage resulting from treaty abuse.

The newly introduced bilateral protocol was brought into force on 19 June and notified by the Indian Ministry of Finance, establishing enhanced measures designed to prevent non-taxation and aggressive tax-avoidance strategies such as treaty shopping.

Under the updated framework, the agreement incorporates the internationally recognized Principal Purpose Test, an anti-avoidance tool that empowers tax authorities to scrutinize the true commercial intent of cross-border investments.

Tax officials will now have the authority to deny treaty benefits if it is reasonably concluded that obtaining a tax advantage was a main objective of a corporate structure or transaction, shifting the standard for investors from simple legal documentation to proving genuine economic rationale.

These structural adjustments incorporate OECD Multilateral Instrument mandates into the bilateral relationship, ensuring relief applies strictly to legitimate trade and capital movements while aligning with broader global efforts against base erosion and profit shifting.

The provisions of the amended protocol will formally apply to all income derived in India starting from 1 April 2027.

By preventing multinational tax exploitation, this bilateral agreement secures national revenue bases while fostering a more transparent and legally sound commercial environment for cross-border investments between India and Sri Lanka.

Industry stakeholders and cross-border businesses will closely monitor further regulatory guidance from fiscal authorities in both nations as corporate entities begin restructuring their operational setups to comply ahead of the 2027 enforcement deadline.

Two suspects have been arrested in connection with the fatal shooting of a man in the Korathota area within the Nawagamuwa Police Division, police said.

The shooting took place on July 16, 2026, resulting in the death of one person. Following the incident, officers from the Homagama Divisional Criminal Investigation Bureau commenced investigations into the attack.

Based on information gathered during the inquiry, police arrested two suspects yesterday evening (19). One of the suspects is believed to have operated the motorcycle used by the assailants during the shooting, while the other is alleged to have assisted in carrying out the crime.

The arrests were made in the Delgoda area of the Biyagama Police Division and the Wanduramulla area of the Nawagamuwa Police Division.

Police have also taken into custody the motorcycle allegedly used in the shooting.

The suspects, aged 21 and 29, are residents of Ranala and Pallama. Further investigations into the incident are being carried out by the Homagama Divisional Criminal Investigation Bureau.

Samagi Jana Balawegaya (SJB) parliamentarian S.M. Marikkar has rejected calls for an unconditional opposition alliance aimed solely at removing the ruling government, pushing back against growing momentum for a joint political front.

Speaking to journalists in Colombo, the opposition lawmaker clarified the main opposition party's position regarding resurfaced unification talks with the United National Party (UNP) and broader coalition proposals across opposition factions.

The stance comes amid renewed debate over merging opposition resources to challenge the current government on critical legislative issues.

Responding to recent comments from Sri Lanka Podujana Peramuna Organiser (SLPP) MP Namal Rajapaksa advocating a broad anti-government front, Marikkar said that past political differences and grievances cannot be erased simply to achieve power.

He noted that while joint opposition action is acceptable on specific national concerns, such as opposing proposed changes to the retirement age of judges, an overarching alliance created purely to bring down the NPP government remains unacceptable.

The Department of Meteorology has forecast several spells of showers today (20) in the Western, Sabaragamuwa and North-western provinces, as well as in the Kandy, Nuwara-Eliya, Galle and Matara districts.

Showers or thundershowers could also develop in some areas of the Ampara and Monaragala districts after 2.00 p.m., according to the Meteorological Department.

Meanwhile, mainly dry weather conditions are expected to continue across the rest of the island.

The Department further warned that strong winds reaching speeds of around 40–50 kmph may occur at times over the western slopes of the Central hills, Northern, North-central, Central and North-western provinces, as well as in the Ratnapura, Hambantota and Trincomalee districts.

The public has been advised to take necessary precautions to minimise possible damage caused by temporary strong winds and lightning during thundershowers.

India has approved its first dengue vaccine, with the Drug Controller General of India (DCGI) granting market authorisation to vaccine QDENGA, developed by Takeda Biopharmaceuticals India.

The vaccine is approved for people aged 4 to 60 years and can be given regardless of whether a person has previously been infected with dengue. Unlike some dengue vaccines, QDENGA does not require pre-vaccination screening, allowing eligible individuals to receive the vaccine without first being tested for past dengue infection.

Takeda said the approval marks a major step in India's fight against dengue, a mosquito-borne disease that affects millions of people every year. 

"Since its launch in 2022, QDENGA has been approved in 43 countries, with more than 32 million doses distributed globally. This approval marks an important step forward in strengthening dengue prevention in India," said Mahender Nayak, Head of Intercontinental Markets at Takeda. 

The company said long-term data collected over seven years showed that the vaccine continues to protect against dengue infection and hospitalisation caused by all four dengue virus serotypes.

The Indian approval is based on findings from Takeda's global clinical development programme, which included 19 Phase I, II and III clinical trials involving more than 28,000 participants in countries where dengue is common as well as regions where it is not. The decision was also supported by results from the Phase III DEN-302 clinical trial conducted in India, which assessed the vaccine's safety and immune response in people between 4 and 60 years of age. QDENGA is given as two injections of 0.5 ml, administered under the skin three months apart.

Takeda said India carries one of the world's highest dengue burdens, with all four virus serotypes circulating simultaneously in several parts of the country. "QDENGA is designed to protect against all four serotypes, regardless of prior exposure. Its approval represents an important step in strengthening India's comprehensive approach to dengue prevention, alongside vector control, surveillance, community awareness and other public health measures," said Goh Choo Beng, Medical Affairs Head for Takeda's Southeast Asia and India Cluster.

The company added that the World Health Organization (WHO) recommends QDENGA for use in dengue-endemic regions and supports its inclusion in public immunisation programmes in high-transmission areas without requiring pre-vaccination screening. QDENGA has also received WHO prequalification, confirming that it meets international standards for quality, safety and effectiveness. This also makes the vaccine eligible for procurement by global agencies such as UNICEF and the Pan American Health Organization (PAHO). Dengue is a mosquito-borne viral disease reported in more than 125 countries. According to the company, India accounts for nearly one-third of the global dengue burden, with rapid urbanisation, climate change and widespread mosquito breeding continuing to increase the risk of infection across the country.

Source: Times of India

Spain dethroned Argentina to claim the World Cup with a 1-0 victory over the defending champions after extra time on July 19.

A Ferran Torres strike in the 106th minute helped Spain edge past 10-man Argentina for their first World Cup title since 2010.

Second-half substitute Torres was the hero for the European champions, thumping home in the second half of extra time after Nico Williams nodded down a cross.

After a pre-game “closing ceremony” featuring Hollywood star Tom Cruise and American singer Jennifer Hudson’s rendition of the US national anthem, the match kicked off with US President Donald Trump in attendance following long lines endured by fans and other attendees caused by enhanced security checks.

Spain were the better side in a sleepy first half that saw just four shots on goal – all from La Roja – and only one on target. Spain goalkeeper Unai Simon was barely tested by the defending champions, who struggled to find their rhythm.

Argentina were dealt a blow just before half-time as defender Lisandro Martinez went off injured and was replaced by veteran Nicolas Otamendi.

The final at the MetLife Stadium in New Jersey featured a star-studded half-time show for the first time, with performances by Madonna, flanked by Brazilian legends Ronaldo and Ronaldinho, K-pop boyband BTS, and Shakira.

The interval show also squeezed in cameos from the fictional football coach Ted Lasso (played by Jason Sudeikis) and the Muppets, including Miss Piggy and Kermit the Frog.

The second half was all Spain again. Barcelona forward Torres had the clearest chance before the second-half hydration break, but his header was directed straight at Emiliano Martínez.

The goalkeeper showed a safe pair of hands to keep Spain’s attack at bay after relentless attacks on the Argentina goal, including a stoppage-time free kick by Lamine Yamal.

Martinez, who play his club football for England’s Aston Villa, made 10 saves in regulation time, the most in a World Cup final.

It was a one-sided game, with captain and talisman Lionel Messi largely anonymous and the defending champions became the first side to fail to register a single shot on goal in a World Cup final.

Argentina went a man down in stoppage time after midfielder Enzo Fernandez, scorer of their equaliser in their semi-final victory over England, received a second yellow for a late challenge on teenage centre-back Pau Cubarsi.

The match ended 0-0 after 90 minutes, meaning the US, hosting football’s showpiece for the second time, still has not seen a goal in a World Cup final after the 1994 showpiece in California also ended goal-less between Brazil and Italy before the Italians’ penalty shoot-out victory.

Spain substitute Williams put the ball in the net in extra time, but Slovenian referee Slavko Vincic swiftly ruled out the 97th-minute strike for a foul.

It was the first World Cup final that pit the reigning South American and European champions against each other, while also the first in which the world’s two top-ranked nations faced each other in football’s most important game.

Argentina, FIFA’s top-ranked side, lifted the Copa America for a record 16th time in 2024 while second-ranked Spain won Euro 2024.

Spain’s second World Cup puts them level with France and Uruguay, with Brazil still the most successful team in the tournament with five wins.

Argentina were aiming to become the third team in history to retain the World Cup. Only Italy (1934 and 1938) and Brazil (1958 and 1962) have achieved that feat.

France captain Kylian Mbappe won the Golden Boot with 10 goals, followed by Argentina’s Messi who had eight.

England beat France 6-4 to finish third on July 18.

Source: The Straits Times 

Opposition Leader Sajith Premadasa has accused the government of attempting to dismantle the independence of the judiciary and establish autocratic single-party rule through its proposed changes to judges' retirement ages.

Premadasa made these remarks while addressing a public dialogue on the protection of democracy, the rule of law and judicial independence, organised by the Samagi Lawyers' Association at the Sri Lanka Foundation Institute on Saturday.

The Opposition Leader questioned why the government, led by President Anura Kumara Dissanayake, had proposed raising the retirement age of Supreme Court judges from 65 to 67 and that of Court of Appeal judges from 63 to 65, while making no move to abolish the Executive Presidency through a constitutional amendment, despite having campaigned on such a promise.

He noted that when this inconsistency was raised in Parliament, the government had denied any such commitment existed, a response he characterised as an attempt to erode democracy entirely.

He said that the manoeuvre would not only damage the independence of the judiciary but also undermine public confidence in it.

Premadasa further pointed to the government's failure to fill several outstanding vacancies in the superior courts, describing this as both a violation of fundamental rights and a form of undue pressure exerted upon the judiciary.

He observed that political actors often invoked international principles on judicial independence and the separation of powers while in opposition, only to abandon them once in office and begin consolidating power instead.

Placing these developments in a longer historical context, the Opposition Leader traced the evolution of legal and democratic principles from the Mesopotamian, Egyptian, Greek and Roman civilisations through to the Magna Carta, the development of common law in medieval England, the 1787 American Constitution, the 1948 Universal Declaration of Human Rights, the 1966 covenants on civil and political rights, and the 1985 basic principles on the independence of the judiciary.

He said that governance rooted in this democratic tradition depended on a strong separation of powers between the legislature, the executive and the judiciary, supported by a functioning system of checks and balances, adding that judicial independence and the strength of democracy were directly linked.

Premadasa also warned of potential economic repercussions, cautioning that pressure from institutions such as the IMF could follow the government's course of action, and that facilities such as the European Union's GSP+ trade concession could similarly come under threat.

He said it was necessary to establish the IMF's position on the proposed amendments, and called on the public to unite across class, colour and political lines to resist what he described as an anti-democratic programme, stressing that past periods of judicial interference must not be allowed to recur.

The final rites of former Inspector General of Police (IGP) C.D. Wickramaratne will be held with full police honours this afternoon (20) at the Borella General Cemetery.

Wickramaratne, Sri Lanka's 35th Inspector General of Police, passed away at the age of 63 after sustaining a gunshot injury on Friday.

He joined the Sri Lanka Police in 1986 and rose through the ranks before being appointed Acting Inspector General of Police following the suspension of then IGP Pujith Jayasundara in the aftermath of the 2019 Easter Sunday attacks. He was officially appointed as Inspector General of Police on November 27, 2020.

Although he was scheduled to retire on March 25, 2023, his tenure was extended several times by then President Ranil Wickremesinghe until a new IGP was appointed. He ultimately retired on November 23, 2023, after serving nearly eight additional months beyond his original retirement date.

Police are investigating the circumstances surrounding his death and suspect the incident may have been a suicide. Investigators allege that the firearm issued to his security officer was used in the shooting.

Following the post-mortem examination conducted by the Judicial Medical Officer (JMO) at the Colombo East Hospital, an open verdict was returned. The JMO also directed that body samples be sent to the Government Analyst for further examination.

The firearm believed to have been used has also been forwarded to the Government Analyst for forensic analysis.

Investigations are being conducted by the Western Province South Crime Division and the Malabe Police. As part of the inquiry, investigators have recorded statements from Wickramaratne's wife and three of his security officers.

The investigation remains ongoing pending the results of the forensic examinations and other inquiries.

The Supreme Court has dismissed without hearing a Fundamental Rights petition that sought an order to invalidate an official circular allowing individuals in the country to legally alter their gender identity.

The petition was filed by retired disabled Sri Lanka Air Force Warrant Officer Shantha Jayathilake.

The named incumbent President Anura Kumara Dissanayake alongside former Presidents Maithripala Sirisena and Ranil Wickremesinghe among its respondents.

This decision reinforces existing state policy on legal identity recognition, safeguarding human rights protections and preventing legal regressions that could impact Sri Lanka's standing on fundamental rights indicators.

The Ceylon Petroleum Corporation (CPC) has announced that there are currently no plans to discontinue the QR code-based fuel quota system, citing continued uncertainty in the global fuel market.

CPC Managing Director Mayura Neththikumarage said the system will remain in operation as it plays an important role in managing fuel supplies and protecting the country’s foreign exchange reserves.

He explained that maintaining the QR-based system would help prevent a possible return of fuel queues and the difficulties experienced by the public, particularly if ongoing global conflicts lead to further disruptions.

Neththikumarage said the recent escalation of international conflicts has not affected Sri Lanka’s fuel supply network. However, he added that the CPC is closely monitoring global developments, including possible impacts on fuel prices.

The CPC will continue to assess the global situation while maintaining measures aimed at ensuring a stable fuel supply within the country.