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Monday September 21st, 2026

Sri Lanka value added tax on healthcare is unconscionable

ECONOMYNEXTY – One is not against the imposition of VAT so long as essential commodities and public utilities are taxed at a bearable minimum.

VAT on healthcare services was exempt in Sri Lanka until 1st May 2016, as the principal purpose of the healthcare service was “protection, maintenance or restoration of the health of those who are sick”. The primary purpose of healthcare service is “protecting, (including maintaining or restoring a person’s health) or diagnosing, treating and if possible curing diseases and health disorders”.

Almost all countries charge general consumption taxes on goods and services to consumers. The majority of countries use VAT, which is collected during the production and distribution of goods and services. As of 1st January 2014, 164 countries had VAT, other countries had a single-stage sales tax such as BTT on goods and services supplied to the final consumers.

OECD (‘rich’) countries healthcare VAT exempted

However, almost all the countries have an exemption (or zero rate) or a reduce VAT rate on essential commodities considered socially desirable such as basic food, healthcare services energy and water. This is primarily to reduce the tax burden on essential commodities that forms a larger share of expenditure among low income households. In a review done by Price Waterhouse Coopers, in 2014, 31 out of 32 OECD countries and 24 out of 25 African countries either had VAT exemption or a reduced rate of VAT/BTT on Healthcare services.

In the absence of a national health insurance scheme in Sri Lanka, imposition of a steep 15% VAT on those who are sick, where the majority of the patients are lower middle class who have no choice but to seek healthcare facilities in the private sector is unjustifiable. A majority of them do not wish to go through the hazards and travails of Government hospitals in a non-paying ward, because of their overcrowded conditions. Getting a paying room or ward is next to impossible in Government hospitals.

Medical Tests

Those who work in the private sector and self employed do not have the time to queue up for clinics that require a number to be obtained early morning and wait for ones turn spending at least half a day to obtain medical services. Smaller government hospitals in the outstations request their patents to obtain blood and scan reports from outside as they do not have such facilities.

For example, even Cancer hospital Maharagama does not have a PET Scanner, which can diagnose cancer with 97 percent accuracy and PET scan at a private hospital costs Rs.150,000.

Is it fair to add another 15% or Rs.22,500 to patients who cannot even afford the Rs.150,000. Most government laboratory services take 2 to 3 weeks to provide diagnostic reports for OPD patients thus aggravating the patient’s sicknesses. Hence, people seek private healthcare services not by choice but due to sheer necessity.

Furthermore, Sri Lanka has one of the fastest aging populations in the region. The imposition of a 15% VAT on healthcare services even on senior citizens who have served their country and are now struggling to make a living with a fixed interest income is an unbearable burden. Hardly any insurance company in Sri Lanka provides medical insurance cover for those who are over 65 years. Most countries look after their senior citizens and provide concessions such as reduced or free travel fares, entry tickets to leisure events to their senior citizens.

Senior Citizens Treated Like Squashed Lemons

However in Sri Lanka, after a devoted service to their country, senior citizens are treated like squashed lemons by charging a 15% VAT by the very government that promised welfare to their senior citizens. The overburdened state funded healthcare services will have more pressure if most senior citizens start seeking healthcare services from government hospitals.

Even in countries that have superior national healthcare facilities such as UK and China VAT/BTT exemption on private healthcare services are applicable. For example, in the UK performing medical or surgical procedures with the aim of protecting, maintaining or restoring the health of an individual, nursing sick or injured patients in a private hospital, hospice or nursing home is exempt from 20% VAT. But where the service is carried out for a cosmetic reason rather than as an element of medical or surgical treatment, this service is taxable at 20% VAT.

The tendency of policymakers globally has been to retain existing BT exemptions and concessions, and apply them in the VAT system, especially where those exemptions and concessions apply to services delivered at a business-to-consumer (B2C) level. Basic healthcare is seen as a necessity, and given the regressive nature of VAT, providing concessions is seen as appropriate in ensuring fair and equitable outcomes, especially for the aged, poor or infirm.

Some countries exempt healthcare from VAT, whereas others zero-rate it. Zero-rating means that healthcare providers can obtain a VAT refund on their costs and expenses, whereas exemption does not. In the UK prescription medicine is zero rated, not just exempt. Sri Lanka has exempted medicine but not medical services. Sri Lanka has joined a handful of states that charge VAT from medical services spending by the sick and the aged, services which are almost universally exempted in many countries.

Sudden and Large Expenses

Compared to most other costs even Telecommunication Services, which also has been imposed the 15% VAT, are discretionary and citizenry can reduce usage, whereas healthcare expenditures are a misfortune to a family, almost essential (alternative is to die) are sudden and can be very large. Ironically, even if one is fortunate to have a medical insurance cover, medical insurance providers in Sri Lanka will not reimburse the VAT component unless the hospital invoice is obtained in the name of the medical insurance provider. Since, 2nd May 2016 all healthcare service providers and laboratory service providers have commenced adding the 15% VAT on the total invoice value, making healthcare services providers make fat margins. They need to be cognizant of the fact that previously they were bearing all input VAT as their input VAT was not previously refundable in Sri Lanka (not zero rated), hence the patients should not be passed on the full impact of the 15% VAT.

While no one will disagree that the government needs to substantially increase the tax base and increase tax revenue to GDP from 10.6% today. However, there are better and more equitable ways to generate government revenue and reduce losses (accumulated losses of Srilankan airlines alone exceed Rs.110 Billion since taking over from Emirates in March 2008), wastage and corruption in government owned undertakings rather than pass on tax increases to the sick and the aged.

Ravi Abeysuriya is the Group Director/CEO of the Candor Group. The views expressed in the article are solely of the writer and do not constitute an opinion of the company or any association the writer represent.

Sri Lanka’s Resus Energy commissions 2MW solar power plant

ECONOMYNEXT — Sri Lanka’s Resus Energy has commissioned a 2MW solar power plant located in Damana, Ampara, with commercial operations officially commencing on September 18, the company said in a market filing.

The renewable energy facility was developed and implemented by Resus Eastern Solar, a wholly owned subsidiary of Resus Energy.

The plant is expected to generate and supply approximately 3.5 GWh of clean energy annually to the national grid.

The commissioning further expands the company’s renewable energy portfolio while supporting Sri Lanka’s broader transition toward sustainable energy generation.

Shares closed at 8.70 rupees, down 1.14 percent. (Colombo/September21/2026)

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Sri Lanka parliamentarians visit China, South Africa for regional forums

ECONOMYNEXT – Two groups from Sri Lanka’s Parliament visited China and South Africa last week for a traditional medicine forum and the Commonwealth Parliamentary Conference.

The team participating in the 2026 Shanghai Cooperation Organisation (SCO) Forum on Traditional Medicine in Nanchang, Jiangxi Province, China were Speaker Jagath Wickramaratne, Deputy Minister of Health Hansaka Wijemuni, and Managing Director of the Sri Lanka Ayurveda Drug Corporation Marasinghege Jayalal.

Organised by the Good-Neighborliness, Friendship and Cooperation Commission of the Shanghai Cooperation Organisation and the People’s Government of Jiangxi Province, the forum brought together senior officials, health authorities, traditional medicine practitioners, experts, academics, researchers and representatives of the traditional medicine industry to promote cooperation.

Wickramaratne said there was potential for strengthened cooperation between Sri Lanka and China in traditional medicine, including in the areas of medicinal plants, scientific research, education and training, quality standards, technology and the development of safe and effective traditional medicine products.

The team also met with several Chinese investors to discuss potential investment opportunities in Sri Lanka, including investments related to rice-based products.

Separately, a Parliamentary team participated at the 69th Commonwealth Parliamentary Conference in Cape Town, South Africa.

The team comprised Deputy Minister of Mass Media Kaushalya Ariyarathna, Deputy Minister of Cooperative Development Upali Samarasinghe, Members of Parliament Sagarika Athauda, Ilankumaran Karunanathan, Sugath Wasantha de Silva, (CPwD Asia Regional Champion) and Suranga Rathnayake, Secretary-General of Parliament and Secretary of the CPA Sri Lanka Branch Kushani Rohanadeera, and Senior Parliamentary Interpreter Edirisinghe Arachchige Amarasena.

Ariyarathna chaired Workshop C of the 10th CWP Conference, examining approaches to incorporating gender equality into legislation, parliamentary procedures, committee scrutiny, budgeting and post-legislative oversight.

The CPA New Parliamentarian Award 2026 was presented to de Silva for his contribution to promoting inclusive parliamentary democracy, including advancing disability rights and inclusive governance.

Rohanadeera participated in the meeting of the Society of Clerks-at-the-Table (SoCATT), which brought together parliamentary officials from Commonwealth Parliaments to exchange institutional practices and discuss parliamentary administration and procedure. (Colombo/Sep21/2026)

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Sri Lanka stocks close lower; ASPI drops 0.37-pct

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange closed down on Monday, CSE data showed, with the benchmark All Share Price Index moving down 0.37 percent.

The ASPI was down 77.08 points at 20,979, while the more liquid S&P SL20 was down 0.39 percent, or 22.89 points, at 5,906.

Positive contributors to the ASPI were Aitken Spence (up 0.73 percent at 138.50 rupees), Nations Trust Bank (up 0.58 percent at 305.00 rupees), and HNB Life (up 2.14 percent at 143.00 rupees).

Melstacorp (down 0.96 percent at 180.75 rupees), Hatton National Bank (down 0.52 percent at 379.75 rupees), ACL Cables (down 1.92 percent at 92.00 rupees), and Access Engineering (down 1.42 percent at 76.30 rupees) were top negative contributors.

Market turnover was 750.35 million rupees. Capital goods led turnover with 154.1 million rupees, followed by food, beverage and tobacco with 110.9 million rupees.

Blue Diamonds Jewellery said Andrew Lee steppe down as chairman with effect from September 16. (Colombo/Sep21/2026)

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Sri Lanka economic summit to focus on energy transition

ECONOMYNEXT – As the country seeks to strengthen energy security while reducing its dependence on fossil fuels, the energy sector will be a key area of discussion at the Sri Lanka Economic & Investment Summit 2026, organised by The Ceylon Chamber of Commerce on 12-13 October 2026.

The session, “Beyond Fossil Dependence: Balancing Security, Sustainability, and Growth,” will examine how Sri Lanka can diversify its energy sources, accelerate renewable energy adoption and attract investment while ensuring a reliable energy supply for businesses and households.

Discussions will also consider the infrastructure and policy frameworks needed to support the country’s transition towards a modern and competitive energy system.

Edore Onomakpome – Regional Infrastructure Industry Manager – Bangladesh, Sri Lanka and Nepal, at the International Finance Corporation will keynote the session, and join the panel discussion featuring G M R D Aponsu – Secretary to the Ministry of Energy, Damitha Kumarasinghe – Director General, Public Utilities Commission of Sri Lanka, and Manjula Perera – Managing Director, WindForce.

The discussion will be moderated by Sheran Fernando – Senior Advisor, Plus94.

The session will also explore the role of public-private collaboration in developing new energy solutions, encouraging investment and creating opportunities within Sri Lanka’s evolving energy sector.

It will consider how energy policy and investment decisions can support both economic expansion and the country’s longer-term sustainability objectives.

Registrations are now open at https://sleis.chamber.lk/. For more information, contact Alikie on 011 558 8805 (alikie@chamber.lk) or Shanuka on 0701082541 (events.division@chamber.lk). (Colombo/Sep21/2026)

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ADB launches $6bn push for healthier seas and coastal economies

MANILA, PHILIPPINES — The Asian Development Bank (ADB) has announced it will mobilize up to 6 billion dollars through 2030 to confront the mounting threats facing Southeast Asia’s seas and strengthen the blue economy that the region’s food supplies, jobs, and trade depend on.

“The ocean is not just an environmental priority; it is the economic foundation of Southeast Asia,” said ADB President Masato Kanda.

“When marine ecosystems degrade, the damage reaches the fishing net, the family table, and the flooded doorstep. We will put up to $6 billion behind the work of restoring fisheries, building resilient coastal infrastructure, and stopping waste before it reaches the water.”

Kanda announced the ASEAN Blue Economy Initiative at the 58th Association of Southeast Asian Nations (ASEAN) Economic Ministers’ Meeting in Metro Manila.

The initiative runs from 2026 to 2030, and forms part of the $30 billion ADB pledged in May to mobilize for ASEAN priorities by 2030, delivered in its role as the region’s main bank.

Southeast Asia produces about one-fifth of the world’s fisheries and aquaculture output, and its ports, coastal logistics, and tourism sustain trade, jobs, and local income.

However, this natural capital is eroding as ecosystems degrade, plastic waste accumulates, and fishing pressure mounts.

Modeled estimates put expected coastal flood damage across the region at about $11.5 billion a year.

The initiative supports the ASEAN Blue Economy Framework and its Implementation Plan (2026–2030).

Under the initiative, ADB’s support will focus on three areas: strengthening the policy, institutional, and data foundations that credible investment depends on; scaling investment in ASEAN’s priority blue sectors, including fisheries, aquaculture, coastal resilience, and port-linked value chains; and reducing marine pollution through circular economy solutions and innovative finance that brings in private capital.

Because much marine pollution begins inland, the initiative will also improve water and solid-waste systems upstream.

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Sri Lanka’s Softlogic Finance plans Rs1bn rights issue 

ECONOMYNEXT — Sri Lanka’s Softlogic Finance PLC (CRL) plans to raise 1.002 billion rupees through a rights issue of 5 new ordinary voting shares for every 12 existing ordinary voting shares, the non-bank financial institution said.

The company will issue 401,072,162 new ordinary voting shares at 2.50 rupees per share.

“The purpose of the Rights Issue is strengthening the Tier 1 Capital of the Company and expanding its lending portfolio, particularly in the vehicle financing segment,” Softlogic Finance said.

Softlogic Finance currently has 962,573,191 ordinary voting shares in issue, with a stated capital of 2.32 billion rupees.

The issue is pending regulator and shareholder approval. (Colombo/September21/2026)

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