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Sri Lanka Faces Sharp Vehicle Price Hike with New 15 percent Tax

Sri Lanka is facing a complex crossroads in its automobile import policy that could significantly alter the country’s economic landscape. 

The Vehicle Importers Association of Sri Lanka (VIASL), led by Chairman Prasad Manage, has warned that vehicle prices across the board may “increase beyond affordable limits” if the government proceeds with a proposed 15 per cent tax on vehicle imports after the 2026 Budget. 

At the heart of the issue is the removal of an import-valuation discount: currently, duties and taxes are applied to only 85 per cent of a vehicle’s export-country value because importers receive a 15 per cent deduction. 

Manage says this concession has been in place since 2015, and that the government may remove it, which would immediately trigger steep price increases even for modest models.

Manage’s comments highlight how import duties are computed: based on the vehicle’s value in the exporting country after deducting all consumable taxes. If the 15 per cent deduction disappears, that higher base will translate into higher duty and tax bills. 

For instance, a compact Suzuki Wagon R might see its price hike by about Rs 400,000, while a high-end Toyota Land Cruiser could jump by at least Rs 3 million. 

The proposed tax reform also reportedly intends to unify the duty structure for brand-new and used-vehicle imports, which would have knock-on effects across the market in terms of pricing, demand, and foreign-exchange outflows.

From a macro-economic perspective the push and pull is significant. On one side, vehicle import duties have become a meaningful source of tax revenue: in 2025, the Sri Lanka Customs collected approximately Rs 165 billion (about US$ 550 million) from vehicle import taxes by mid-June, with the expectation of about Rs 450 billion for the full year. 

According to analysts from BMI Research/Fitch, tax revenue from vehicle imports could contribute roughly 1.8 per cent of GDP in 2025up from 1.3 per cent in 2019. 

On the flip side, however, the easing of vehicle import restrictions since early 2025 has triggered a rapid escalation in foreign-exchange outflows. In just five months after the ban was lifted, vehicles accounted for about US$ 742 million in letters of credit (LCs). 

The government and central bank have raised alarms that such outflows risk depleting foreign-exchange reserves and endangering imports of fuel and other essentials. 

The tension is palpable: the state needs additional tax revenue to meet fiscal targets—under the International Monetary Fund-supported reform programme, revenue mobilization is considered critical for debt sustainability. 

But at the same time, the outflow of foreign currency associated with vehicle imports threatens macro-economic stability. The government and regulators are reportedly planning tighter monitoring mechanisms to control the pace of vehicle imports and ensure that foreign-exchange drain remains within manageable bounds.

Moreover, critics argue that relying so heavily on border taxes especially on vehicles, a luxury consumption category raises questions about equity, competitiveness, and long-term industrial policy. The reform appears to be a delicate balancing act: increasing duties and taxes to raise revenue and slow import-driven FX outflows, while avoiding a sharp contraction in demand or a surge in unofficial channels.

For buyers and the auto-industry alike, the implications are immediate: higher vehicle prices, uncertainty about future import regulations, and potential shifts in consumption patterns. For the economy, the broader consequences hinge on whether policies are calibrated to protect foreign reserves, maintain fiscal momentum, and yet not stifle legitimate domestic demand and investment in the auto sector. As the Budget 2026 deliberations approach, all eyes will be on how the government rationalizes the vehicle import tax regime, the valuation discount, and the dual imperatives of revenue generation and FX conservation.

 
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Government to recruit 8,547 to state sector

The Cabinet of Ministers granted approval to the resolution furnished by the Prime Minister to grant approval to the relevant Departments and institutions

under each Ministry to recruit 8,547 persons to fill the vacancies in them.

Approval of the Cabinet of Ministers had been granted at their meeting held on 30.12.2024 to appoint a committee comprising officials headed by the Secretary to the Prime Minister to take necessary actions in regard to the number of recruitments to be made essentially after identifying requirements, priorities and time frames by reviewing the process of recruitment to the government service.

Considering the requests forwarded to the said committee for filling the vacancies in the posts existing in departments and other institutions under respective Ministries, as per the recommendations made at the committee meeting held on 02-10-2025, the Cabinet of Ministers granted approval to the resolution

furnished by the Prime Minister to grant approval to the relevant Departments and institutions under each Ministry to fill the vacancies in them.

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43% of schools found with mosquito breeding sites

The highest number of dengue mosquito breeding sites in the country have been found within the school system, according to the National Dengue Control Unit (NDCU).

Dr. Prashila Samaraweera, a specialist at the NDCU, revealed that 43% of the schools inspected were identified as having active mosquito breeding grounds. The warning comes amid a surge in dengue cases across the island, exacerbated by the prevailing rainy weather conditions.

The NDCU further reported that 11 districts have now been classified as high-risk zones for dengue transmission. Public health officials are urging school administrations, parents, and local authorities to take immediate action to eliminate mosquito breeding sites, particularly in and around school premises.

(Source - newsfirst)

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Michael Kors donates $2.7M to support Sri Lanka’s school meals programme

The United Nations World Food Programme (WFP) has welcomed a US $2.7 million contribution from global fashion brand Michael Kors to strengthen Sri Lanka’s National School Meals Programme.

The support comes through the brand’s long-running “Watch Hunger Stop” campaign and will benefit WFP’s Home-Grown School Feeding (HGSF) initiative.

Earlier this month, Michael Kors announced the launch of two special-edition T-shirts made from a cotton-linen blend to support WFP. The designs feature photographs by Maxime Poiblanc of fruits and vegetables grown through WFP’s home-grown school feeding program in Sri Lanka.

The T-shirts, priced at $40, went on sale online at michaelkors.com and in select Michael Kors stores globally from October 1, 2025, with all profits donated to WFP.

In May, Kors visited WFP headquarters in Rome to express the brand’s support for the humanitarian organization and meet with Executive Director Cindy McCain and other WFP leaders about the Watch Hunger Stop initiative. The partnership between Michael Kors and WFP began in 2013, with the mission of providing nutritious school meals to children in food-insecure regions. Over the past decade, the collaboration has helped WFP deliver more than 35 million school meals.

Watch Hunger Stop focuses on supporting WFP’s home-grown school feeding program, a proven approach that empowers local farmers—many of them women—and strengthens communities while ensuring children receive nutritious meals. By connecting school caterers with local farmers, the program ensures that ingredients are sourced locally, enriching the community economy. Farmers gain a reliable income along with training and tools, while children receive the nutrition they need to grow, thrive, and stay in school.

Sri Lanka, where WFP has operated for decades, has been chosen as the first country for this new phase of support. Over the next three years, Michael Kors’ funding will enable WFP to provide daily school meals to 250,000 children and assist 1,500 farmers in supplying eggs, vegetables, and fruits across 10 districts. The support will also allow WFP to equip 30 schools with solar panels, upgraded kitchens, and improved classrooms, enhancing learning environments for more than 3,000 students.

(Source - Dailymirror)

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2 dead after consuming contents of a bottle floating on the sea

One person from a group of four has reportedly died at a fishing wadiya in Narakkaliya, Puttalam, after consuming contents of a bottle found floating on the sea, while another succumbed to the effects at Puttalam Hospital.

The remaining two victims are currently receiving treatment at the hospital.

(Source - adaderana)

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Statement Issued by the Professional Web Journalists Association

Arrests and Criminal Investigations Must Adhere Strictly to Due Process – Police Must Refrain from Publicity Stunts

The Professional Web Journalists Association firmly believes that arrests and criminal investigations must be conducted strictly in accordance with the procedure established by law.

It is our association's observation that the forced extraction of 'voice cuts' from suspects through coercion or influence after their arrest, and the subsequent release of those clips to the media and social media, occurs with the tacit approval of the Sri Lanka Police. Furthermore, such childish and unprofessional actions severely damage the image of our country's Police Department, raising serious questions and doubts about the professionalism of the investigating officers. Ultimately, this undermines public confidence in the entire criminal justice system, bringing disrepute to the whole system. Our association urges the Sri Lanka Police and other law enforcement agencies to immediately cease the release of footage of arrested suspects to the media by the police officers themselves. Finally, even though the finger is often pointed at the media and social media, we have a reasonable suspicion that in many instances, these video clips are being released by the Police Department itself. If this is the case, it is a serious offense for law enforcement agencies to propagate such footage while violating the law and professional ethics themselves.

As has been repeatedly pointed out by judges, legal experts, Police Spokespersons, senior police officials, and by the law of this country from time to time, arrest does not equate to a conviction. Our association believes that in enforcing the law, the fundamental rights of all citizens must be respected, and investigation efficiency and professionalism must be safeguarded.

Therefore, we emphatically urge the Sri Lanka Police, the Ministry of Defence, and all responsible authorities to immediately stop broadcasting such video footage without pointing fingers at the media.

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Woman Remanded For Entering Court With Fake Gun

A woman who attempted to enter the Avissawella court premises with a fake firearm has been remanded until November 4, following her appearance before the magistrate earlier today.

The suspect was apprehended yesterday (27) afternoon during routine security checks at the court entrance.

Officers discovered the imitation weapon concealed in her handbag, raising immediate concern.

According to police, the woman, a resident of East Netolpitiya, had arrived at court to attend a traffic-related hearing.

Her motives for carrying the fake firearm remain under investigation.

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Audit Exposes $1.4 Million Tax Evasion and Procedural Lapses in Sri Lanka’s e-Visa Contract

A special audit investigation into Sri Lanka’s new e-Visa system has revealed serious irregularities, including tax evasion, unregulated foreign remittances, and violations of procurement rules, raising concerns about transparency and accountability in a project meant to modernize the country’s visa process.

According to the audit report, GBS Technology Services and IVS Global-FZCO, operating under VFS VF Worldwide Holdings Ltd, failed to remit USD 1.418 million in taxes to the Inland Revenue Department. Between April and August 2024, the companies collected both the 2.5% Social Security Contribution Levy (SSCL) and 18% Value Added Tax (VAT) from applicants—totaling USD 172,970 in SSCL and USD 1,245,390 in VAT but did not pay these sums to the government.

The audit also found that the firms processed 373,991 visa applications during this period, earning at least USD 6.9 million in service fees. An additional USD 1.82 million was generated from 98,401 visa-exempt applications countries that were granted free visas under a government tourism promotion scheme. Despite the exemption, travelers were still charged USD 18.50 per application, a move auditors described as “unjustified and exploitative.”

Under the former Electronic Travel Authorization (ETA) system, there was no service fee, and an approved upgrade proposal had recommended only a USD 1 charge. The sharp increase to USD 18.50, even for tourists and business travelers meant to be encouraged under promotional initiatives, has drawn criticism from both tourism and legal experts, who question how the decision was authorized.

The audit further exposes procedural violations in the award of the e-Visa contract. Both the Committee on Public Finance (COPF) and the audit report note that VFS Global and its affiliates were appointed without competitive bidding or adherence to government procurement regulations. This not only deprived the Department of Immigration and Emigration of cost-effective alternatives but also undermined transparency in the awarding process.

Adding to the controversy, the report reveals that visa revenues were transferred directly to foreign bank accounts controlled by the service providers, bypassing official government financial channels. This has made it impossible for authorities to verify the actual revenue collected from visa applications, creating significant gaps in state oversight.

Auditors concluded that the Department of Immigration and Emigration lacked full visibility over the project’s financial operations, leaving public funds vulnerable to misappropriation.

The revelations have sparked renewed calls for a full parliamentary inquiry and for the suspension of the e-Visa contract until accountability is established. Critics argue that such opaque deals erode investor confidence and damage Sri Lanka’s international reputation at a time when transparent governance is vital for economic recovery.

The audit’s findings now put pressure on the Finance Ministry and the Attorney General’s Department to take swift legal and administrative action to recover lost revenue and restore public trust in state-managed digital systems.

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IMF, World Bank Press Sri Lanka to Fix Aswesuma Data

Sri Lanka’s flagship Aswesuma social welfare program, designed to support low-income families, has come under renewed international scrutiny as the World Bank and International Monetary Fund (IMF) urge the government to strengthen its targeting mechanism, maintain accurate beneficiary databases, and improve program transparency.

At a recent parliamentary meeting attended by World Bank representatives, senior Finance Ministry officials, and members of key parliamentary committees on finance and economic development, international partners stressed the urgent need for a comprehensive and continuously updated digital database to ensure that welfare benefits reach genuinely poor and vulnerable citizens.

According to a statement from the Parliament Secretariat, World Bank officials said the establishment of a reliable social security data system is “a productive investment” that will allow authorities to correctly identify eligible households and prevent inclusion errors and political bias. They further clarified that merely being listed in the system does not guarantee Aswesuma eligibility each case must be verified through data analysis.

The Aswesuma program, which replaced the long-running Samurdhi welfare scheme, is a key pillar of Sri Lanka’s IMF-backed reform agenda aimed at improving fiscal efficiency and reducing poverty through better-targeted subsidies. However, the initiative has faced widespread criticism for exclusion errors, data inconsistencies, and lack of transparency in beneficiary selection.

The IMF, in its recent review of Sri Lanka’s Extended Fund Facility (EFF), reiterated that reforms to the social protection system are central to the bailout program’s success. The Fund has emphasised that welfare spending must prioritise the “most vulnerable households” while phasing out inefficient and politically influenced cash transfers. Maintaining a credible, transparent, and verifiable Aswesuma registry has thus become both a social and fiscal condition tied to continued international support.

During parliamentary discussions, lawmakers raised concerns about the fairness of the selection process and proposed the formation of village-level committees to identify deserving families. They also called for public display of beneficiary lists to enhance accountability and reduce political interference.

Officials from the Finance Ministry and Divisional Secretariats admitted that communication lapses and poor coordination among field officers particularly Grama Niladharis—had contributed to implementation delays and confusion. They assured that corrective measures were being taken, including training programs and clearer role definitions for officers involved in the program’s rollout.

The World Bank’s latest country update highlighted that while poverty levels are expected to decline slightly this year, 22% of Sri Lankans still live below the poverty line, with another 10% hovering just above it. Malnutrition and low wage growth remain serious concerns.

As Sri Lanka navigates its post-crisis recovery, effective reform of Aswesuma has become a litmus test for balancing IMF-driven fiscal discipline with social protection for the poor, making the accuracy and integrity of its welfare database more crucial than ever.

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NewsSuspects’ voice cuts obtained & released with tacit approval of police – PWJA

The Professional Web Journalists’ Association (PWJA) has also stated that they firmly believe that arrests and criminal investigations must be conducted strictly in accordance with the procedure established by law.

The PWJA’s statement comes hours after former BASL Chairman – Saliya Pieris P.C.had severely criticised the conduct of the police with regard to parading of suspects before media, getting them to give voice clips and sharing those clips on media and social media.

The PWJA statement further notes : “It is our association’s observation that the forced extraction of ‘voice cuts’ from suspects through coercion or influence after their arrest, and the subsequent release of those clips to the media and social media, occurs with the tacit approval of the Sri Lanka Police.”

“Even though the finger is often pointed at the media and social media, we have a reasonable suspicion that in many instances, these video clips are being released by the Police Department itself. If this is the case, it is a serious offence for law enforcement agencies to propagate such footage while violating the law and professional ethics themselves,” the statement adds.

 The PWJA urges Sri Lanka Police and other law enforcement agencies to immediately cease the release of footage of arrested suspects to the media by police officers themselves.

The statement issued by the PWJA is as follows : 

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Government Acts to Save Historic Nuwara Eliya Post Office

The Government has launched an urgent initiative to conserve and restore the 130-year-old Nuwara Eliya Post Office, one of Sri Lanka’s most iconic colonial-era landmarks, amid growing public concern over its deteriorating condition and past attempts to convert it into a private tourist hotel.

A special inter-agency meeting chaired by Health and Mass Media Minister Dr. Nalinda Jayatissa was held recently to review progress on the restoration and conservation plan. The meeting brought together representatives from the Department of Posts, Sri Lanka Tourism Development Authority (SLTDA), Department of Archaeology, Department of Buildings, Sri Lanka Navy, and other government bodies.

The discussions centred on preserving the post office’s architectural and historical integrity while upgrading its infrastructure to serve both postal operations and tourism. Built in 1894 during the British colonial era, the red-brick post office situated at the heart of Nuwara Eliya—is a beloved symbol of the town’s old-world charm and a favourite subject among local and foreign visitors alike.

The previous government’s proposal to hand over the property to a private developer had triggered widespread criticism from heritage conservationists, postal unions, and residents who feared the loss of public ownership and cultural authenticity. The current administration has firmly rejected privatisation, stating that the landmark will remain under the Department of Posts and instead be developed as a state-managed heritage attraction.

Officials at the meeting highlighted that the roof of the post office is severely damaged, causing rainwater leaks that have disrupted postal operations and damaged parts of the building. Restoration of the roof has been identified as the top priority, followed by structural reinforcements, façade preservation, and interior refurbishments—all to be carried out under strict heritage conservation guidelines.

The Department of Archaeology and Department of Buildings have been tasked with preparing preliminary renovation plans, while the Sri Lanka Navy has offered technical and logistical support for the conservation project. Dr. Jayatissa instructed officials to expedite the process, ensuring that authentic materials and designs are used to maintain the building’s historic value.

Heritage experts stress that restoring the Nuwara Eliya Post Office is not only about preserving a structure but also about protecting a national symbol of Sri Lanka’s postal history and colonial architecture. The government’s decision to retain public ownership and promote the site as a heritage tourism attraction aligns with global trends of adaptive reuse where historical buildings are modernised without compromising authenticity.

Once renovations are complete, the restored post office is expected to become a flagship attraction in Nuwara Eliya’s heritage tourism circuit, balancing functionality with cultural preservation and reinforcing Sri Lanka’s commitment to safeguarding its architectural legacy.

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UDA Faces Scandal over Irregular Approval for 40-Storey Tower

When Home Lands Group launched its grand “Pentara Residencies” in Thummulla, Colombo 5, the 40-storey luxury apartment complex was hailed as Sri Lanka’s largest-ever local real estate investment. But beneath the glamour lies a deepening controversy involving illegal approvals, zoning violations, and alleged corruption within the Urban Development Authority (UDA).

The storm erupted when the UDA Chairman appointed two senior officials Yasantha Pradeep and E. N. S. B. Ekanayake to probe allegations that the project had been approved unlawfully. The move, however, drew a furious backlash on social media, with users comparing it to “asking the thief’s mother to investigate the theft,” since the same two officials were reportedly responsible for granting the irregular approval.

Activists claim the UDA’s internal probe is nothing more than a cover-up to mislead the President and the newly appointed Urban Development Minister Bimal Rathnayake, who is currently on an official visit to China. Reports suggest the UDA Chairman is attempting to bury the issue before the Minister returns.

At the heart of the dispute are three major violations cited by civic groups and planning experts:

Zoning Violation: A plot classified as a Special Residential Zone was unlawfully treated as part of a Mixed Development Zone.

Height Limit Breach: Approval was granted for a 120-metre tower, even though the legal cap is 50 metres.

Falsified Frontage Width: The project’s frontage, less than 30 metres, was fraudulently recorded as 40 metres to satisfy UDA building criteria.

Government gazette regulations clearly state that building height can be calculated only when both access roads fall within the same zoning category. In this case, one entrance lies in a Mixed Development Zone and the other in a Special Residential Zone, making such an approval legally invalid.

Adding to the mounting pressure, resident Thusitha Kumara Kulasingham lodged complaints with the President and Prime Minister, alleging that UDA officials manipulated calculations to grant approval for a 40-storey structure.

 Both the Presidential Secretariat (10.10.2025) and the Prime Minister’s Office (14.10.2025) confirmed receipt of her complaint and said relevant authorities were instructed to take legal action if irregularities are found.

Meanwhile, civic watchdog Mathrubhumi announced plans to file legal proceedings against the UDA Chairman, alleging bribery and abuse of office. Several residents of Claessen’s and Tickell’s Roads have also protested, accusing the UDA of applying double standards denying ordinary homeowners permits beyond three floors while greenlighting high-end luxury towers.

Home Lands Group insists that all statutory and environmental approvals were obtained and that “Pentara Residencies fully complies with UDA and NBRO regulations.” Yet the controversy continues to expose serious governance lapses in Sri Lanka’s urban planning sector.

As one activist put it bluntly:“No tower should rise higher than the law itself. If corruption goes unchecked, Colombo’s skyline will stand on the ruins of public trust.”

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