Sri Lanka expands its Social Security Contribution Tax scope, lowering thresholds and tightening compliance, raising fresh concerns for businesses and economic activity.
Sri Lanka has moved forward with another significant tax reform, as Speaker Dr. Jagath Wickramaratne officially granted assent to the Social Security Contribution Tax Amendment Bill. This development marks a key step in the government’s ongoing effort to strengthen revenue collection and expand the national tax base.
The legislative process saw the second reading debate of the Social Security Contribution Tax Amendment Bill take place on the 7th, followed by its approval with amendments during the third reading. The bill’s passage reflects the government’s commitment to revising existing tax structures in response to fiscal pressures and economic challenges.
At the core of the amendment is a revision to the Social Security Contribution Tax Act No 25 of 2022. The updated law introduces changes aimed at increasing tax compliance by reducing the business turnover threshold required for tax registration, while also revising specific exemptions related to motor vehicles.
A key feature of the amendment is the expansion of the tax base. The annual turnover threshold for businesses to fall within the tax net has been reduced from 60 million rupees to 36 million rupees, effectively bringing a larger number of businesses under mandatory registration and contribution requirements.
In addition, the amendment introduces updated provisions governing tax registration and the cancellation of registration based on the revised threshold. It also modifies the existing framework of exemptions, particularly those connected to motor vehicle transactions, signalling tighter controls and broader fiscal oversight.
