Sri Lanka’s banking sector has submitted a wide-ranging set of proposals for the 2026 National Budget, positioning itself as a key partner in the country’s economic recovery. The recommendations, prepared by the Sri Lanka Banks’ Association (SLBA) on behalf of licensed commercial banks, were handed over to Deputy Finance Minister Dr. Anil Jayantha Fernando at the Presidential Secretariat.
The SLBA proposals call for reforms to strengthen financial stability, including targeted credit guarantee schemes, tax relief on impairment provisions, and alignment of banking taxes with regional benchmarks. The Association noted that current tax rates of 53% for local banks and 65% for foreign banks hinder competitiveness and lending capacity.
Measures to support small and medium enterprises (SMEs) include concessional VAT registration, subsidised accounting tools, mandatory Taxpayer Identification Numbers, and financial literacy programmes. Banks also urged digitisation of transactions to widen the tax base and improve credit access.
To stimulate growth, the SLBA proposed rationalising indirect taxes, broadening revenue collection through digitisation, and treating withholding tax as a final tax to ease compliance.
On the digital front, the Association recommended a national cloud framework, incentives for fintech startups, VAT on global digital services, and stronger public–private collaboration on cybersecurity. It also called for tax incentives to promote green finance, public–private partnership bonds, and expedited restructuring of SriLankan Airlines to improve the sovereign rating.
Sector-specific proposals included long-term funding for tea replanting and agricultural mechanisation, alongside calls for integrated digital platforms linking ports, customs, banks and revenue authorities.
“The financial services industry is ready to partner the government in shaping a resilient, inclusive and digitally empowered economy,” the SLBA said, adding that the 2026 Budget could mark a turning point for Sri Lanka’s recovery.
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