NCCSL hosts post-Budget analysis seminar, highlights key fiscal policies for 2025

The National Chamber of Commerce of Sri Lanka hosted a knowledge-sharing session, the Post-Budget Analysis Seminar 2025, on 19 February bringing together an esteemed panel of experts, policymakers, and industry leaders to analyse the impact of the National Budget 2025 on the economy and the business climate.

The post-Budget analysis seminar provided a comprehensive breakdown of key budgetary policies, taxation related proposals, government expenditure and revenue generation commitments.

The expert panel featured KPMG Sri Lanka Principal Tax and Regulatory Hasitha Raddella, Ministry of Finance, Planning and Economic Development Department of Fiscal Policy Director Jayani C. Wickrama Arachchi, Inland Revenue Department Commissioner, Tax Policy and Legislation S. Iyesha Asanthi, Ernst & Young Former Partner and National Chamber Council Member Ruwan Fernando. The session was moderated by Commercial Bank PLC CFO and National Chamber of Commerce of Sri Lanka Past President Nandika Buddhipala, a respected finance and investment professional.

The discussions covered key aspects of the Budget which may have implications on the business community, sectoral implications including the highlights of the key economic features, fiscal projections and proposed changes to the tax structure outlined for the year 2025, KPMG Sri Lanka Principal Tax and Regulatory Hasitha Radella presented an overview of the tax reforms, stated, “As Sri Lanka continues its recovery, Budget is focused on several taxation reforms with sustained improvements in fiscal management will be key to maintaining growth momentum for the country.” He also discussed about positive aspects of the proposals such as ease of paying taxes and Government expectations to enable the ease of doing business mainly through the digitalisation of public services, however VAT implications on the digital services are yet to be further clarified. 

Clarifications on the Simplified Value Added Tax (SVAT) system and the transition from SVAT to a Risk-Based Refund System that will streamline the VAT refund process to an efficient process was explained by Inland Revenue Department Commissioner Tax Policy and Legislation Iyesha Asanthi. She further commented that if any eligible exporter who exports more than 50% of total supplies is willing to get VAT refunds under new risk-based refund system he can be included to the pilot project. Current VAT threshold is Rs. 15 million per quarter and Rs. 60 million per year at the standard rate 18%. Due to current situation of the country the Budget proposals of 2025 doesn’t include tax exemptions or concessions, however the budget proposals made to amend individuals’ tax rates by increasing tax relief from Rs. 1.2 million to 1.8 million and by relaxing tax brackets the individuals including employees will be benefitted.

Ministry of Finance, Planning and Economic Development Director Fiscal Policy Dept. Jayani Wickrama Arachchi highlighted, “With fiscal space being highly constrained, every policy move must be strategic-ensuring key fiscal targets are protected while safeguarding economic stability in the medium term and the interest payments remain a significant burden, accounting for a substantial government recurrent expenditure, primarily due to Sri Lanka’s high borrowing costs. We need to move ahead despite these challenges.”

Commercial Bank PLC CFO Nandika Buddhipala emphasised “We appreciate the Government efforts to come up with 2025 Budget with unprecedented constrains, inter alia, Public Finance Management Act and IMF Debt Sustainability Framework, however, making sure the alignment with them. Furthermore, it is extremely important to be cognisant of the persisting debt servicing and interest cost burden and our concrete plans with regard to creating conduce environment for export oriented and FDI conducive economy with decreasing emphasis on non-tradable orientation.”

He further mentioned about proposal to enhance Sri Lanka’s network of FTAs, especially with ASEAN nations, through participation in the Regional Comprehensive Economic Partnership (RCEP) and other agreements would be favourable for the business community. Expansion of DTAs beyond the current 46, prioritising countries with significant countries with significant trade and investment potential would be more advantageous to the country.

National Chamber of Commerce of Sri Lanka Council Member Ruwan Fernando also added his comments, noting, “Budget 2025 looks optimistic and presents a forward-thinking approach in supporting the business community. The allocation of resources towards innovation and export growth will create a more dynamic and resilient economy.”

Attendees gained insights to understand the policy changes and capitalise on new opportunities. During the Q & A session the participants clarified on the plans to establish a development bank to provide development bank establishment tailored financial solutions for SMEs and new entrepreneurs within the existing state bank framework and the focus on providing relief to the exporters. 

The National Chamber of Commerce reaffirmed its commitment to empowering the business community with timely and expert-driven insights. The Post Budget Seminar 2025 was praised for its engaging discussions and valuable takeaways, helping businesses to strategise for the year ahead.