The International Monetary Fund (IMF) has noted that Sri Lanka imposes a lower fixed excise duty per litre on imported alcoholic beverages compared to the duty levied on domestically produced alcohol. The IMF suggests that this discrepancy should be addressed within the policy and administrative agenda of the Medium-Term Revenue Strategy.
In its Revenue Administration Diagnostic Assessment, the IMF states, “To safeguard revenue, ensure neutrality, and minimize opportunities for tax evasion, excise-liable goods whether imported or domestically produced are typically subject to uniform tax rates. Therefore, such differential treatment is generally atypical.” The Fund has recommended that Sri Lanka conduct an assessment to establish a more equitable tax base, supported by robust border controls, the inspection of secure tax stamps, and systems for monitoring both production and the marketplace.
Furthermore, the report identifies an urgent transition risk concerning the contract for the supply of the secure sticker system used for alcoholic beverages. The Excise Department has announced that the current contract with ‘Madras Security Printers’ will conclude in January 2027, and that tender bids for the selection of the next supplier have been opened.