SriLankan Airlines tax liability reaches USD 63 million after passenger embarkation levies were retained for daily cash operations.
SriLankan Airlines has been using approximately USD 63 million collected from departing passengers as embarkation levy as its daily working capital, without paying the amount to the Airport and Aviation Services Company, revealed Thushara Rodrigo, Director General of State Enterprises, before the Parliamentary Committee on Public Accounts (COPA).
The embarkation levy collected from a departing passenger amounts to USD 60. Of this, USD 40 should go to the Consolidated Fund of the Treasury, USD 15 to the Airport and Aviation Services (Sri Lanka) Company, and the remaining USD 5 to the Sri Lanka Tourism Development Authority. However, until December 2024, SriLankan Airlines had failed to pay the USD 15 portion due to the Airport and Aviation Services Company. Steps have been taken to restore these payments from 2025 onwards.
The outstanding amount accumulated before December 2024 is approximately USD 63 million, which is nearly Rs. 20 billion in Sri Lankan rupees. Rodrigo pointed out that since both institutions are fully state-owned enterprises, a proper solution must be found. He noted that the airline had retained these funds collected from passengers for its daily cash operations.
COPA member Ravi Karunanayake questioned why such errors are allowed to set precedents for state companies, pointing out that if a private company had committed such an act, its directors could have faced arrest. Treasury officials also fully agreed with this view.
The government has now appointed a committee to reorganize SriLankan Airlines, and discussions have been held with the Treasury Secretary regarding the recovery of the outstanding amounts. Additionally, the Treasury has taken over a USD 300 million loan obtained from state banks and a USD 175 million bond, which are being repaid using taxpayer money.
The government has paid USD 60 million in cash for the USD 175 million treasury-guaranteed bond and its related interest, while the remaining portion has been settled as sovereign bonds at a 15% haircut with a 0.4% interest rate. Of these bonds, 27.4% are due to be repaid in April 2026, another 27.4% in 2027, and the remaining 45.2% in 2028.
