The Ceylon Chamber of Commerce, through its Tax Steering Committee, has actively engaged with stakeholders on the proposed Inland Revenue (Amendment) Bill of 2026, recognising its potential implications for businesses and the broader economy. While acknowledging the importance of updating the tax framework, the Chamber’s efforts have focused on assessing the impact of the proposed amendments, highlighting several provisions that warrant closer attention.

The Chamber Tax Steering Committee reviewed the proposed amendments and assessed their impact on business continuity, investment, taxpayer rights and Sri Lanka’s competitiveness. The Committee conducted a comprehensive evaluation, focusing on areas that could affect financing, compliance, and the overall business environment.

In addition, the Ceylon Chamber organised a seminar on 12 March 2026 at its auditorium, bringing together members, industry stakeholders, policymakers, and the regulator. The session provided participants with a detailed briefing on the proposed changes, clarified key provisions, and facilitated an open exchange of views between the private sector and authorities, especially on areas of concern raised by the membership

Building on these engagements, the Tax Steering Committee submitted detailed recommendations to the Ministry of Finance, outlining the potential impact of the proposed amendments and their implications for the Government’s broader policy direction. Key recommendations included the following:

• Amendments to Thin Capitalisation Rules: Maintaining the exclusion of negative reserves in gearing calculations to avoid adding tax burdens on financially distressed companies, and calling for the allowability of finance cost on all genuine commercial borrowings to protect legitimate financing.
• Restrictions on Submission of Evidence: Introducing flexibility in the proposed 6 to 9 month timeline for submitting information to the Commissioner General, allowing taxpayers to provide verified evidence beyond this period to balance administrative efficiency with fairness.
• Penalties for Compliance Lapses: Ensuring that enforcement measures remain proportionate, avoiding stringent penalties that include imprisonment, for minor compliance failures. The Chamber proposed relying on existing recovery mechanisms to safeguard investment confidence and fairness to taxpayers.
• Taxation of Insurance Businesses: Deferring amendments to Section 67 pending further consultation with the insurance industry and the regulator. Avoiding treating policyholder distributions as taxable income of insurers, and greater clarity in the application of adjustment provisions, particularly in light of IFRS 17 implementation.
• Discretionary powers of the Commissioner General: It should be clearly defined and guided by transparent rules to avoid uncertainty. While such powers are important for enforcement, they must be applied fairly, with proper safeguards, to ensure consistency and maintain taxpayer confidence.

The Chamber has also engaged directly with policymakers to ensure that provisions identified as those that could negatively impact business sentiment are either suitably amended during the Committee Stage or deferred for further consultation prior to implementation.

The Ceylon Chamber reiterates the importance of maintaining a stable, predictable, and investment-friendly tax framework, particularly at a time when Sri Lanka is seeking to strengthen economic recovery and attract private investment. It remains committed to a constructive, solutions-oriented engagement with policymakers, working collaboratively to refine and strengthen legislation in the public interest to ensure timely support and effective implementation of reforms. It will continue working closely with the Government and relevant authorities to support the development of a balanced and effective tax policy that promotes growth while safeguarding revenue objectives.