FINANCIAL CHRONICLE — Sri Lanka is preparing to expand its tax base by reducing the registration threshold for the Social Security Contribution Levy (SSCL) through a proposed amendment to the SSCL Act No. 25 of 2022. This bill was published in a Gazette on February 27, 2026, and released on March 3, 2026, by the Minister of Finance, Planning and Economic Development. The changes align with proposals introduced in the November 2025 Budget.
The proposed amendments aim to include more businesses under the levy while redistributing the tax burden within the motor vehicle sector, as highlighted in a briefing by KPMG Sri Lanka.
If approved by parliament, the new regulations will take effect on April 1, 2026, reducing the quarterly threshold for SSCL registration from 15 million rupees to 9 million rupees. Consequently, the annual threshold will decrease from 60 million rupees to 36 million rupees. Businesses meeting these criteria must apply for registration within 15 days of reaching the threshold.
To facilitate the transition, a provision allows businesses newly qualifying under the lower threshold to be deemed compliant if they submit their registration to the Commissioner General of Inland Revenue (CGIR) within 15 days of the Amendment Act’s commencement.
Additionally, registered entities may qualify for de-registration if their total turnover for four consecutive quarters does not exceed the new 36-million-rupee threshold, effective April 1, 2026.
The bill also proposes changes in the taxation of motor vehicles. The existing SSCL exemption at the point of importation is slated for removal starting April 1, 2026. To balance this change, the government plans to exempt turnover from the wholesale and retail trade of motor vehicles from the levy, also beginning on this date.
However, KPMG Sri Lanka noted that the bill currently lacks transitional provisions to address the tax treatment of motor vehicle stocks as of March 31, 2026.
