Sri Lanka’s Inland Revenue Department has announced a series of amendments under the Inland Revenue (Amendment) Act, No. 11 of 2026, aimed at strengthening tax administration and improving taxpayer compliance.
Under the new provisions, the Taxpayer Identification Number (TIN) has become mandatory for a range of key transactions, including opening bank accounts, registering and renewing motor vehicles, registering businesses, transferring company shares, and obtaining credit cards.
The department said the new law officially came into effect on 3 June 2026.
The amendments also provide that profits earned from certain vehicle sales will no longer be treated as taxable income under specified conditions.
Capital gains tax for individuals and partnerships remains at 15%, while the rate applicable to trusts, mutual funds, and non-governmental organisations has been revised to 30%.
In addition, the scope of the 5% withholding tax on service payments exceeding Rs. 100,000 per month has been expanded. As a result, information technology professionals, social media specialists, artists, athletes, photographers, translators, and writers now fall within the withholding tax regime.
The Inland Revenue Department further stated that taxpayers will no longer be required to submit Self-Estimated Tax (SET) returns. Instead, quarterly tax instalments will be calculated based on the previous year’s tax liability.
Subject to certain conditions, proceeds received upon the maturity of a life insurance policy, policy surrender, or the death of the policyholder will be exempt from income tax.
Meanwhile, interest on late and underpaid taxes up to the 2024/25 assessment year will be waived. However, taxpayers must settle the outstanding principal amount due for 2026 in full before 2 December 2026 in order to qualify for the relief.
