The controversial sugar tax reduction introduced during former President Gotabaya Rajapaksa’s administration has taken a dramatic turn, as the Attorney General (AG) has ruled that no criminal offence was committed in the decision to slash the special commodity tax on imported sugar from Rs. 50 to just 25 cents per kilogram.
The announcement was made by the Criminal Investigation Department (CID) in Colombo Magistrate’s Court today, where ongoing proceedings are being held regarding the infamous October 2020 tax cut. The tax reduction, implemented virtually overnight, sparked public outrage and allegations of massive financial misconduct, with critics claiming the move cost the government over Rs. 160 billion in revenue.
Presenting the AG’s legal opinion, the CID told Additional Magistrate Keminda Perera that the decision-making process itself did not constitute a criminal act. However, the AG has instructed that further investigations continue to determine whether any individual or entity unlawfully benefited, or engaged in bribery or corruption, as a result of the policy.
The court was informed that the investigation must now pivot toward tracing any undue profits, illegal enrichment, or breaches of public trust stemming from the sugar tax reduction.
As per the AG’s directive, the Additional Magistrate ordered the CID to transfer all relevant files, documents, and evidence to the Commission to Investigate Allegations of Bribery or Corruption. The Bribery Commission is now tasked with identifying whether any public officials or private parties gained illegal benefits from the tax cut.
The original complaint that sparked the case was filed by former Finance Secretary Mahinda Siriwardena, prompting the CID to launch an investigation. At the time, widespread public and political backlash accused the government of engineering a tax policy that favored a select group of importers, while failing to pass the savings on to consumers.
Although the AG’s findings rule out criminal wrongdoing in the policy decision itself, the search for accountability continues — now under the microscope of the Bribery Commission.
