Category: Daily Financial Times

Sounding the alarm against the recent severe threats on enterprises and Government organisations, Kaspersky recently tackled the visibility gap plaguing the Asia Pacific (APAC) region, and how Security Operations Centre (SOC) in the age of AI can help. It stressed one cannot defend what cannot be seen.

This was the main takeaway of Kaspersky’s annual media conference, APAC Cyber Security Weekend, with the theme ‘When Speed Outpaces Visibility’ held at Guangzhou, China

Headlined by the global cybersecurity company’s Asia Pacific Managing Director Adrian Hia, the event tackled one of today’s biggest cybersecurity challenges: attackers, backed by Artificial Intelligence (AI), are moving faster than organisations can see, understand, and respond.

‘As speed and connectivity reshape modern enterprises and organisations in the region, driven mainly by AI and its applications, security teams face growing blindspots across IT and OT environments. As a result, cybersecurity today is no longer just a race against time. It’s a race against invisibility,’ said Hia.

New era of cybersecurity

Hia tackled key cybersecurity trends Kaspersky is observing: AI-assisted attacks, cyber sabotage targeting infrastructure across IT and OT systems, and more sophisticated cyberespionage.

‘Last year, we detected and blocked half a million unique malicious files daily, which is 7% higher than in 2024. Recent cyberattacks across APAC show that the divide between the online and physical realms is completely gone. Recently, Nichirei Corp suffered a cyberattack that disrupted its logistics network. Meanwhile, India’s manufacturing sector has become an APAC hotspot for industrial ransomware, with groups consistently paralysing factory floors and industrial IT services,’ revealed Hia.

‘AI agents introduce a new supply chain layer-this year alone, Kaspersky has identified over 15,000 malware samples disguised as agentic AI software. Because agents dynamically depend on third-party frameworks, APIs, and plugins, a single compromised upstream dependency can cascade across downstream systems, dramatically expanding the surface for cyber sabotage and cyberespionage. As threats become AI-native and defences AI-powered, APAC organisations must look beyond just stopping attacks and ask whether they actually have visibility into what’s already happening inside their environments,’ he added.

Based on a new report from the Kaspersky Compromise Assessment division, in 31% of incidents that were analysed, malicious activity in organisations had been going on for over three months. Over half (52%) of high-severity compromises were only discovered after 90 days of going undetected, and the oldest incident identified over the last year remained undetected for as long as four years.

The findings point to a broader challenge in security operations. Many organisations have invested in security technologies, but technology alone cannot compensate for gaps in monitoring, detection, and operational readiness.

‘Our recent report highlights why a modern, unified SOC is becoming business-critical. When organisations rely on reactive security practices or lack continuous monitoring, attackers gain valuable time to move laterally, escalate privileges, and compromise critical assets. A mature SOC shortens that window by providing the visibility, expertise, and operational discipline needed to detect threats before they become major incidents,’ Hia said.

SOC built with AI expertise to restore visibility

As cybercriminals increasingly leverage AI to scale and automate attacks, defenders must do the same. Kaspersky has been combining AI with human expertise for the last two decades.

Since 2004, Kaspersky has built and refined advanced Machine Learning (ML) models trained on huge volumes of anonymised global telemetry, collected ethically and responsibly from millions of endpoints worldwide. This reservoir of high-quality data has enabled the company to develop and leverage on AI systems that are not only safe and accurate but also resilient to evolving threats.

‘AI isn’t an add-on at Kaspersky. For the past 20 years, AI has been embedded across our entire technology stack, enabling faster detection, smarter automation, and consistent protection. We have always believed that as cyber threats continue to evolve, the future of cybersecurity lies in the collaboration between AI and human expertise. It is not either or – it is HuMachine Intelligence, as we call it. It is the philosophy that has guided our innovation for years and will continue to shape how we protect organisations against the threats of tomorrow,’ Hia explained.

Companies that manage complex IT infrastructures and handle massive data volumes can leverage the comprehensive solutions from the Kaspersky Next product line, which provide real-time protection, full threat visibility, and robust EDR/XDR investigation and response capabilities. Generative AI models within the platform swiftly transform raw data into structured, actionable intelligence for security teams and decision-makers, enabling them to work more efficiently while reducing manual effort and bridging skill gaps.

Kaspersky also helps organisations restore their visibility through its managed security services such as Kaspersky Compromise Assessment, Kaspersky MDR and Kaspersky Incident Response, which cover the entire incident management cycle – from threat identification to continuous protection and remediation.

To enable a successful SOC deployment and ongoing maintenance, Kaspersky offers early engagement through it Kaspersky SOC Consulting during the initial setup or when enhancing your existing security operations. This comprehensive consulting service is designed to help companies build a robust SOC and streamline its processes.

Kaspersky ensures Cybersecurity True to Business, focusing on providing clear outcomes, protecting revenue, easing workloads and preventing downtime. Kaspersky’s deep threat intelligence and security expertise is constantly transforming into innovative solutions and services for organisations of every size, from small businesses to large enterprises, combining proven AI-driven protection technologies with simple management and expert support.

Recognised in independent tests and trusted by millions of individuals worldwide and nearly 200,000 organisations, Kaspersky helps detect threats earlier, respond faster and operate with greater confidence and freedom, protecting what matters most.

On a track that is beginning to assist the spinners gradually India placed themselves in a commanding position in the first cricket Test against Sri Lanka ending a truncated second day at 460-9 at the Galle Cricket International Stadium yesterday.

Play was not possible till 2.35 pm due to persistent rain and in the 43 overs that was possible for the day India added 172 runs for the loss of seven wickets to their overnight score of 288-2. Sri Lanka bowled a lot better, with their spinners being consistent with their lengths and the wickets column was a testament to that.

Debutant Keshara Nuwantha, trusted with the second new ball, removed Rishabh Pant for 39 for his maiden Test wicket and followed it up with Lokesh Rahul’s wicket. Rahul came to resume his innings after retiring hurt on the first day but was out for 82 (175 balls, 10 fours 1 six). Devdutt Padikkal continuing from where he left on the first day reached the 150-run mark before being deceived by a superb delivery from Prabath Jayasuriya to get out stumped for 167. He batted 339 minutes and hit 15 fours and one six in the 230 balls he faced.

At the tea break India had lost half the side for 364. Ravindra Jadeja became Nuwantha’s third victim after the break which brought Dhruv Jurel and Manav Suthar together. The duo forged a 55-run stand to take India’s total past 400. Jurel who got a reprieve on 29 from the Sri Lankan Captain Dhananjaya de Silva at slip went on to notch up a fifty (51 off 68 balls, 4 fours, 1 six) before de Silva made up for his early lapse by pulling of a stunning catch to end his knock.

Mohamed Siraj tried to be aggressive but perished for 11 to Asitha Fernando who bowled splendidly without much luck. Manav Suthar fell to Jayasuriya off the very next ball, but Sri Lanka couldn’t finish off the Indian innings as the final pair survived the last 17 balls of the day to take their team’s total to 460. Jayasuriya ended up as the most successful bowler with 4/109 off 36 overs. Batting is expected to get tougher as the Test progresses and Sri Lanka will face an uphill task to stage a comeback in this game.

The match resumes on the third day today at 9.45 am with a minimum of 98 overs to be bowled weather permitting.

Sri Lankan engineering and technology company ISF, with bold ambitions in manufacturing artificial intelligence (AI), last week launched the world’s first fully automated coconut de-watering system.

The system improves productivity, reduces labour dependency, and addresses operational inefficiencies across the coconut processing industry, while improving return on investment.

Designed and manufactured in Sri Lanka by local engineers, the system automates a process that has traditionally relied on manual handling.

The system was unveiled through a live demonstration attended by Science and Technology Minister Prof. Chrishantha Abeysena, diplomats representing ISF’s key international markets, industry leaders, and members of the media. Participants were given the opportunity to observe the technology in operation and understand the key benefits it offers to coconut processors.

ISF Director Anjula Sivakumaran said: ‘I am proud to have designed, tested and launched this automated coconut de-watering system. My clients in Indonesia and the Philippines are delighted with this innovation, and this particular machine will be shipped to the Philippines in a few weeks. My team of engineers will be travelling there to oversee the installation and provide after-sales support.’

‘This forms part of my vision to help regional and local firms to automate their operations so that they can compete globally. I also want to realise this vision by leveraging Sri Lanka’s outstanding engineering talent. In doing so, we will help customers achieve their commercial goals through a very short return on investment. What ISF does extends beyond coconut de-watering,’ Sivakumaran added.

‘We continue to develop technologies across the entire coconut processing value chain, including dehusking, deshelling, and paring. By combining engineering expertise, automation, and AI, I aim to create solutions that solve difficult business problems. I am proud that we continue to invest in pioneering technologies through extensive research and development, while working closely with our global partners,’ she said.

Established in 1977, ISF has evolved from a manufacturing company into a provider of complete technology, engineering, automation, and process solutions serving the dairy, coconut, food, pharmaceutical, chemical, and fast-moving consumer good (FMCG) industries.

‘It’s a new world,’ Sivakumaran said. ‘My goal is to help transform companies in Sri Lanka and across the region to global standards at a fraction of the cost charged by Western technology companies.’

Bangladesh continued to impress in the ICC World Test Championship with a superb nine-wicket victory against the current WTC table-toppers Australia in Darwin.

With this landmark win, Bangladesh are now placed fourth in the WTC standings with 66.67 PCT.

Opting to bat first, Australia could not get going against the pace attack of Bangladesh as Hasan Mahmud got rid of both the openers.

The visitors continued to attack with wickets at regular intervals with just Steve Smith showing some resilience for the former World Test Champions.

Australia eventually folded out for 198 with player of the match Mahmud delivering a memorable spell (6/55) that set up things nicely for Bangladesh.

Bangladesh’s reply in the first innings with the bat was led by opener Tanzid Hasan’s magnificent century (101 off 197 balls) combined with Captain Najmul Hossain Shanto’s 84 off 126 balls.

A crucial contribution of 65 off 154 balls by Mehidy Hasan Miraz overshadowed Josh Hazlewood’s six-wicket haul as Bangladesh were bowled out for 426.

Mahmud continued to impress in the second innings as well as he removed the Australia openers cheaply again giving Bangladesh the dream start.

With a hefty lead lead of 228, spin played a significant role for the visitors as Mehidy took charge with a wonderful five-wicket haul.

Cameron Green (104 off 201 balls) waged a lone battle but the Shanto-led side gave little away as Australia were bowled out for 284 runs.

Requiring just 57 runs to win, the visitors got there with nine wickets to spare marking a significant moment in Bangladesh cricket.

The historic win came up after Bangladesh were skittled out for 54 runs in the warm-up match against Cricket

Australia XI.

Shanto, who was determined to put up a fight against a challenging Australia side, credited the team after the momentous victory.

‘Very happy, proud of myself and the way the boys played. We did lot of hard work,’ he said during the post-match presentation, calling it the biggest Bangladesh win across formats.

‘Earlier, five years ago, pacers didn’t want to play Tests. But we’ve been playing lots of Test cricket and they are giving importance to Test format.

‘They want to play, want to perform, want to be world-class. That is the mindset they now have.

‘This is the biggest win so far for Bangladesh in any format. Going forward, we want to do something special in the future.’

Parliament’s Committee on Public Finance (CoPF) has called for a review of the cost structure of Sri Lanka’s liquor security sticker system, questioning why digital codes are charged at the same rate as physical stickers despite their lower production cost.

The CoPF, chaired by MP Dr. Harsha de Silva, examined the cost, technical standards, and fiscal benefits of the system, which was introduced following the 2016 Budget to curb untaxed and counterfeit liquor and safeguard excise revenue.

The contract was awarded in 2017 to Indian company Madras Security Printers (MSP). The system was subsequently expanded in 2021 to permit digital inkjet codes to address difficulties in applying physical stickers on high-speed liquor production lines.

However, the Committee was told that the fee of $ 5.99 per 1,000 paper stickers is also charged for 1,000 digitally printed codes.

The CoPF noted that while initial infrastructure costs for digital printing machinery at bottling plants had to be considered, digital codes would generally cost less than paper stickers. It therefore called for a review of the existing pricing structure and the economic benefits accruing to the Government.

The Committee also called for the adoption of relevant international ISO standards and a Track and Trace system covering liquor products from production to the consumer, alongside a mobile application allowing consumers to verify product authenticity.

With a new tender process under consideration, the CoPF stressed that evaluation should cover price, quality, data security, and technical standards, with officers possessing the required technical expertise included in the evaluation process to guard against counterfeit stickers and imitation.

The Excise Department was instructed to study international practices and submit a report to the Committee.

In the latest July 2026 round of the Gallup-style ‘Mood of the Nation’ poll conducted by Verité Research, the Government’s approval rating moderated to 50%, following a post-election high of 65% in the previous February 2026 round. The polling partner was Vanguard Survey Ltd.

Perceptions of the economic outlook reduced sharply. Those who think the economy is ‘getting better’ declined to 42% from 64% in the previous round. Those who said it was ‘getting worse’ increased to 40%, and those who said they disapproved of Government increased to 31%, both from around 15% in the previous round.

Over half, 56%, said that the current economic conditions in Sri Lanka are ‘poor.’ Only 38% said conditions are ‘good’ or ‘excellent,’ in contrast to the previous round where a majority said so.

The net rating on the economic outlook and the state of the economy are averaged to create an Economic Confidence Index ranging from -100 to +100. This was -39 in mid-2024 but came into positive territory after February 2025, and declined to -8 in this round of polling.

The precise phrasing of questions and response percentages to two decimal points on this ‘Mood of the Nation’ survey are detailed below. They add up to less than 100 because some percentage said they did not know or refused to answer.

*Government Rating | ‘Approve’ 49.83% | ‘Disapprove’ 31.40% | In response to the question, ‘Do you approve or disapprove of the way the current Government is working?’

*Economic Outlook | ‘Getting Better’ 41.63% | ‘Getting Worse’ 40.29% | In response to the question, ‘Do you think that the economic conditions in the country as a whole are getting better or getting worse?’

*State of the Economy | ‘Good’ or ‘Excellent’ 38.00% | ‘Poor’ 55.59% | In response to the question, ‘Rate the economic conditions in the country today as either excellent, good, or poor.’

These questions were different from those in other recent national surveys published. For instance, the ‘Social Indicators Survey’ said it asked about satisfaction with specific political figures or groups, and reported satisfaction with the President and Prime Minister as 76% and 68%, and satisfaction with ‘MPs of the ruling party’ as 45%. The ‘Mood of the Nation’ survey, in contrast, asked about approval of Government as a whole, and got a result of 50%, which is close to the response on ruling party MPs in the ‘Social Indicators Survey.’

The regularly conducted ‘Mood of the Nation’ poll is part of the Sentiment Survey instrument of Verité Research, and enriches its regular macro-political briefings. The instrument allows other organisations to add survey questions to check the sentiments of Sri Lankans. More details on the polling results are available to clients.

The latest poll was administered between 11 and 30 July based on a nationally representative, multi-stage, randomised sample of 2,013 Sri Lankan adults from separate households. This survey was designed to have a maximum sampling error margin of ±2.21% for the full sample at a 95% confidence level. Error margins can be further affected by lapses that could arise in the implementation process.

Unlike most economic forums where the spotlight falls on Government policy and reform, a discussion on Sri Lanka’s economic future turned the focus on the private sector.

Verité Research Executive Director Dr. Nishan de Mel described the economy as a ‘racket’ marked by tax non-compliance and high real returns to those with financial assets, while Advocata Institute Chairman Murtaza Jafferjee said economic policy was effectively shaped for about 1,000 people and called for greater competition to change the status quo.

Speaking at a panel discussion organised by the Sri Lanka – Korea Business Council on ‘Sri Lanka’s Future: Forecast, Scenarios and Challenges,’ the two economists highlighted structural constraints facing the post-crisis economy.

Jafferjee argued that substantial macroeconomic reforms had already been undertaken but competition, productivity, and trade remained critical to growth, while Dr. de Mel cautioned that growth which failed to improve the lives of the majority would ultimately prove unsustainable.

Dr. de Mel said Sri Lanka spent less than most countries on welfare, with the International Monetary Fund (IMF) having to push the country to spend 0.6% of GDP, which he said remained below levels in many poorer countries.

‘We have a country-and this is why I said it’s a racket-the people who earn don’t pay taxes,’ he said.

He pointed to the substantial revenue generated from withholding taxes (WHT) as an indication of weaknesses in wider tax compliance. If taxpayers were already fully declaring and paying their liabilities, increased WHTs should largely be deductible against final tax payments rather than producing a substantial increase in overall revenue, he argued.

Dr. de Mel had earlier used the ‘racket’ description when discussing the impact of high real interest rates and taxation. He said low inflation alongside high interest rates disproportionately benefitted those with substantial savings, while people dependent on wages faced higher taxation, including 18% Value Added Tax (VAT), with Government revenue in turn used to service interest payments.

‘This is a racket in which people like us, you know, benefit enormously on the backs of those who see very little benefit of the economy,’ he said.

Jafferjee said Sri Lanka’s productivity problem was closely linked to inadequate competition and the influence of a narrow group of interests over economic policy.

He said, figuratively, that economic policy was effectively shaped for about 1,000 people, rather than referring to a literal list of individuals, arguing that policies had frequently been framed and implemented to accommodate incumbent interests.

‘The main determinant of productivity is competition,’ Jafferjee said.

At the same time, he rejected the perception that little reform had taken place following the economic crisis.

‘If not for this crisis, there are so many things that were fixed in this country on the macro side that would have never been possible,’ Jafferjee said.

He cited the new Central Bank law, Fiscal Management Act, and Public Debt Management Act as three crucial pieces of legislation, alongside changes in governance and tax administration. Significant technical assistance had also been undertaken as part of the IMF-supported reform program.

Jafferjee pointed to increased scrutiny by tax authorities of assets, including overseas accommodation, art, and gems as evidence of changes in revenue administration.

He identified productivity, competition, and the structure of the economy as key challenges beyond macroeconomic stabilisation and legislative reforms.

The State-owned enterprise (SOE) footprint was part of the problem, with State enterprises capable of distorting competitive neutrality where they operated alongside private businesses, he said.

Jafferjee called for more competition, liberalisation of imports and exports, a reduced SOE footprint, and greater foreign direct investment (FDI).

‘We don’t need FDI because we need capital, we need knowledge,’ he said.

Sri Lanka also needed to reconsider its approach towards domestic production and international trade.

‘What people misunderstand in Sri Lanka is there being a need to produce what Sri Lanka needs. What Sri Lanka needs to do is to produce what the world needs,’ Jafferjee said.

Contrasting Sri Lanka with East and Southeast Asian economies, he said successful export economies were also substantial importers and more integrated into international production networks. Sri Lanka’s economic complexity ranking had improved only from around 89 to 83, while Vietnam had advanced from around 65 to 45.

Trade agreements and economic diplomacy were important to expanding Sri Lanka’s integration with international markets, he said.

Jafferjee also identified the diaspora as a source of knowledge needed to diversify production. Sri Lankans who had spent long periods working in overseas companies could bring expertise, corporate networks, and knowledge of international markets, he said.

Several institutional changes to facilitate greater private sector participation were also progressing. Jafferjee said an insolvency framework was due to come into force in December, while public-private partnership (PPP) legislation was at an advanced stage and would enable greater private sector participation. Reforms were also envisaged for the commercial management of SOEs.

He acknowledged that the previous SOE restructuring process had failed to complete proposed transactions, but rejected the conclusion that reform efforts had been absent.

Jafferjee attributed the failure partly to efforts to ensure due process following previous Supreme Court decisions reversing privatisations where procedures had been questioned. The process had to balance transparency with practicality, he said.

The political timetable subsequently ran out ahead of the Presidential Election, while bureaucratic willingness to complete transactions diminished as the election approached.

Jafferjee also flagged structural labour constraints, noting that annual births had fallen from around 370,000 to about 240,000, around 20% of certain young working-age cohorts appeared to be missing largely due to migration, and female labour force participation remained around 30% despite women comprising a larger share of university students.

Large numbers of workers also remained in low-productivity employment, requiring improvements in skills and technology, economic restructuring, and greater competition, he said.

Dr. de Mel, meanwhile, said growth had to be assessed against its impact on living standards.

Poverty had more than doubled from around 14.3% to close to 29-30%, adding that even if it had since fallen into the lower 20s, the increase remained substantial. Available Employees’ Provident Fund (EPF) data showed 92% of formal private sector employees earned less than Rs. 100,000, he said.

He called for greater attention to healthcare, education, and other support structures for lower-income households.

‘Growth that doesn’t make the lives of people, the majority, better off, ends up, like in lots of places, biting back, even on those who benefit from that kind of growth,’ Dr. de Mel said.

He also questioned development priorities centred on expensive road infrastructure and increased private vehicle use while public transport remained underdeveloped.

‘Putting more roads at very high costs and more cars on the roads are not the solution,’ he said.

This article comprehensively examines the legal and financial consequences of failing to pay a quarterly income tax instalment on its due date, utilising the first quarterly payment deadline of 15 August as the primary example. It breaks down the immediate liabilities for interest and penalties, the procedural crystallisation of a “tax in default” status, the legacy civil recovery methods, the draconian new criminal prosecutions, and the crucial legal reconciliation between the conflicting administrative timelines within the Act

Transformation from civil debt recovery to criminal magistrate proceedings

The tax administration landscape in Sri Lanka has undergone a profound and highly aggressive transformation following the enactment of the Inland Revenue (Amendment) Act, No. 11 of 2026. By amending the core framework of the Inland Revenue Act (IRA), No. 24 of 2017, the State has effectively shifted the consequences of tax defaults from slow-moving civil debt recovery to rapid, uncompromising criminal Magisterial proceedings.

For taxpayers, ranging from corporate entities to individual professionals, understanding the precise statutory deadlines and the escalating consequences of missing them is no longer merely an administrative task, it is a critical necessity to protect personal liberty.

The Quarterly Instalment Mandate and the 15 August deadline

The foundation of Sri Lanka’s direct tax collection relies on a system of self-assessment and advance payments. Under Section 90 of the Inland Revenue Act, No. 24 of 2017, an instalment payer is legally mandated to pay their estimated tax liabilities in four quarterly instalments. To supplement this process, the Commissioner-General of Inland Revenue issued Circular No: SEC/2026/E/06 (Re – Revised).

As per the IRA 2017, the very first quarterly instalment for a given Year of Assessment must be paid on or before 15 August, if a taxpayer misses this midnight deadline, it triggers an automated, cascading series of financial and penal consequences.

Immediate financial consequences: The accrual of interest

The most immediate consequence of failing to remit the 15 August instalment is the automated levy of late payment interest. The law treats this interest not as a punishment, but as a mandatory financial charge to compensate the government for the time value of money.

Under Section 157(1) of the IRA 2017, if an amount of tax is not paid by the due date, the taxpayer becomes legally liable for interest on the unpaid amount for the period from the due date to the exact date the tax is finally paid. It is critical to note that there is absolutely no statutory grace period for the application of this interest. If the deadline is 15 August, interest begins calculating automatically on 16 August. This interest accrues at a specified rate of 1.5% per month or part of a month.

The 14-day grace period and the 10% penalty

While the law is rigid regarding the immediate accrual of interest, it provides a very brief administrative window for taxpayers to rectify an underpayment before applying punitive financial sanctions.

Under Section 179(2) of the IRA 2017, a person who fails to pay all or part of an instalment required under the Act within 14 days of the due date shall be liable to a penalty equal to 10% of the amount of tax due but not paid. Therefore, for the 15 August deadline, a taxpayer has until 29 August to settle the principal instalment amount. If the payment is not realised by this date, a flat 10% penalty is permanently attached to the outstanding liability, in addition the interest of 1.5% computed monthly, which starts running from 16 August.

The only exception to this penalty trigger is if the taxpayer proactively secured a formal extension. Under Section 179(3), where an extension of time has been granted under Section 151, the taxpayer shall not be liable to this 10% penalty unless the newly extended period expires without payment having been made. (however time extension does not waive off the interest calculation)

The crystallisation of “Tax in Default” status (Section 152) vs. ‘Due and Payable’

A common misconception among taxpayers is that missing the 15 August deadline instantly renders them a legal “defaulter” subject to State seizure or court action on 16 August. However, the IRA 2017 structurally separates a tax being “due and payable” from a tax being officially “in default.”

The payment demand notice

The creation of the formal “tax in default” status is governed exclusively by Section 152 of the Act. Section 152(1) dictates that when a tax is not paid by the date on which it became ‘due and payable’, the Commissioner-General may send a formal notice to the taxpayer demanding payment.

This demand notice is a strict legal instrument that must contain specific statutory elements, including the name of the taxpayer, the amount of tax, interest, and penalties payable, and an explicit demand for the payment of these amounts. Crucially, this notice grants the taxpayer a final 21-day procedural buffer. It is only when 21 days have elapsed after the service of this notice that the taxes owed by the taxpayer officially attain the legal status of “tax in default” in respect of any amounts still remaining unpaid.

Civil recovery methods and procedures (Chapter XVI)

Once the 21-day timeline under Section 152 expires and the taxpayer is officially in default, the Inland Revenue Department (IRD) is empowered to unleash the severe debt recovery mechanisms outlined in Chapter XVI of the IRA and the newly introduced criminal prosecution in the Magistrate’s Court.

1. The Automatic Statutory Lien

(Section 164)

The moment the default status is crystallised, the State automatically secures its interests. Under Section 164(1), where a taxpayer fails to pay a tax by the due date, a ‘lien’ in favour of the Commissioner-General is created on all property belonging to the taxpayer. This invisible legal hold covers the principal amount owing, together with all accrued interest, penalties, and costs of collection.

A ‘lien’ under Section 164 of IRA 2017 is a legal claim on a taxpayer’s property that automatically attaches once taxes fall into default (Section 152), securing the Government’s priority over the asset. It effectively blocks unencumbered transfer of the property and empowers the Inland Revenue Department to enforce recovery via court-ordered sale of that property to settle the unpaid tax debt.

2. Execution Against Property (Section 165)

If the default persists, the IRD can move from a passive lien to active seizure. Under Section 165, the Commissioner-General is authorised to levy execution against the taxpayer’s property, which ultimately leads to the physical seizure and sale of the defaulter’s movable and immovable assets to recover the debt.

3. Third-Party Debtors (Section 170)

One of the most effective civil tools available to the IRD is the ‘garnishee order’. Under Section 170, the Commissioner-General can issue notices to third parties, such as commercial banks, employers, or trade debtors, who owe money to, or hold money for, the defaulting taxpayer. This notice legally compels the third party to hold those funds in trust for the government of Sri Lanka and redirect the payments directly to the IRD to settle the tax debt.

Prior to the 2026 amendments, Section 163(2) empowered the Commissioner-General to institute proceedings in a competent civil court to recover unpaid taxes. In practice, however, this mechanism was often ineffective, as recovery actions could be prolonged by injunction applications and delays inherent in the civil litigation process, resulting in significant delays in tax collection.

The criminalisation of tax defaults: The 2026 Amendment and Magisterial proceedings

In response to concerns regarding the effectiveness of traditional civil recovery mechanisms, Parliament enacted the Inland Revenue (Amendment) Act, No. 11 of 2026, introducing a new enforcement framework that allows certain tax defaults to be pursued through proceedings before the Magistrate’s Court.

The amendment to Section 163 represents a significant shift in tax recovery. Prior to 1 April 2026, unpaid taxes were recoverable through civil proceedings in a court of competent jurisdiction, with the Commissioner-General’s certificate constituting conclusive evidence of the tax liability. Tax arrears were therefore treated strictly as civil debts.

With effect from 1 April 2026, however, the legislation introduces a new enforcement mechanism that operates through the Magistrate’s Court. Under Section 163(4A)(a), where a taxpayer fails to pay tax in default, the Commissioner-General may submit a certificate containing particulars of the default directly to the Magistrate, without first commencing civil recovery proceedings. Upon receipt of the certificate, the Magistrate is required to issue summons on the taxpayer to show cause why recovery proceedings should not proceed.

If the taxpayer fails to establish sufficient cause, the outstanding tax is deemed to be a fine imposed by the Magistrate for an offence punishable by fine only. As a result, the unpaid tax becomes recoverable under the procedures set out in the Code of Criminal Procedure Act, No. 15 of 1979, significantly strengthening the enforcement powers available to the tax authority.

Several features of the new regime reinforce its expedited nature:

Mandatory issuance of summons

Upon receiving the Commissioner-General’s certificate, the Magistrate must summon the taxpayer to appear before court and show cause why further recovery action should not be taken.

Restricted judicial review

Section 163(4C) limits the role of the Magistrate to enforcement. The court is not empowered to examine the correctness of the assessment or the statements contained in the certificate. The Magistrate is also prohibited from postponing proceedings for more than thirty days.

Evidentiary status of the certificate

Under Section 163(4H), the Commissioner-General’s certificate constitutes sufficient evidence that the tax has been duly assessed and remains unpaid. Accordingly, challenges relating to the accuracy or quantum of the assessment cannot be entertained in the Magistrate’s Court. However, where an administrative review or appeal is pending, the Commissioner-General is precluded from issuing the certificate.

Where recovery proceedings are successful, the outstanding tax, together with any applicable penalties and interest, is recoverable in the same manner as a court-imposed fine. Failure to pay the amount as directed by the court may ultimately result in imprisonment in accordance with the procedures applicable to the recovery of fines.

Key features of the 2026 Amendment

Jurisdictional shift: Recovery proceedings move from the civil courts to the Magistrates’ Courts, enabling faster enforcement.

Quasi-criminal enforcement: Unpaid tax may be treated as a fine imposed by the Court, with consequential enforcement measures, including instalment arrangements and imprisonment in default of payment.

Limitation override: Proceedings under Section 163 may be instituted notwithstanding the expiry of the limitation period specified in Section 161.

Additional recovery powers preserved: Proceedings under Section 163 do not prevent the Commissioner-General from pursuing other recovery mechanisms available under the Inland Revenue Act.

This amendment reflects a deliberate policy decision to strengthen tax collection by reducing procedural delays at the enforcement stage. While tax liability continues to arise under the revenue laws, the revised framework introduces a more coercive recovery mechanism that significantly enhances the State’s ability to collect unpaid taxes.

Conclusion

The enactment of the Inland Revenue (Amendment) Act, No. 11 of 2026 has fundamentally rewritten the rules of tax enforcement in Sri Lanka. Missing a quarterly income tax instalment on dates such as August 15th is no longer an issue that can be casually delayed and negotiated over years of civil litigation.

The moment the deadline passes, taxpayers are immediately hit with non-negotiable interest of 1.5% per month followed swiftly by a 10% penalty after just fourteen days. Once the Inland Revenue Department exhausts the 21-day procedural warning under Section 152 [6], the protections of the civil realm evaporate.

By harmonising the gatekeeper clause of Section 160 with the aggressive new powers of Section 163(4A)(a), the State is now legally empowered to drag defaulting taxpayers into Magistrate’s Courts, where unquestionable certificates of debt can rapidly culminate in criminal fines and imprisonment. Absolute, timely compliance is now the only shield against the formidable penal machinery of the modern Sri Lankan tax regime.

LOLC Life Assurance, through its dedicated Takaful arm, Al-Falaah Takaful Life has introduced LOLC Life Family Takaful Deferred Maturity product, a Shariah-compliant long-term financial solution designed to help individuals safeguard their loved ones, strengthen their financial resilience, and prepare responsibly for the future.

The solution is based on the principles of mutual cooperation, shared responsibility, and ethical investment. It was officially introduced at a dedicated Business Launch held in the Eastern Region, bringing together the Company’s sales force and business partners to mark the commencement of its market rollout.

Developed in response to the growing demand for financial solutions that combine Family Takaful coverage with long-term financial planning, the solution enables participants to make contributions under a Shariah-compliant Takaful arrangement while receiving financial support in the event of covered contingencies together with the opportunity for potential fund growth through Shariah-compliant investments. Investment returns are subject to actual fund performance and the applicable terms and conditions of the Takaful Certificate.

LOLC Life Family Takaful is available to individuals aged 18 to 60 years. It offers flexible contribution payment periods of 3, 5, 7, or 10 years, with Takaful Certificate terms ranging from 10 to 40 years, enabling participants to select an arrangement that aligns with their long-term financial objectives.

Participants may also make additional top-up contributions, subject to the applicable product terms and conditions, providing greater flexibility to support their long-term financial goals and potential fund growth objectives.

In addition to the principal Family Takaful coverage, participants may enhance their protection through optional rider benefits, including Accidental Death, Critical Illness benefit, Total Permanent Disability, Partial Permanent Disability, and Hospitalisation per day benefit. These supplementary benefits provide additional financial support when it is needed most, subject to the applicable product limits, exclusions, and the terms and conditions of the Takaful Certificate.

LOLC Life Assurance Executive Director/Principal Officer Dr. Chandana L. Aluthgama said: ‘At LOLC Life Assurance, we remain committed to developing innovative protection solutions that respond to the evolving financial needs of Sri Lankan families. The introduction of Family Takaful marks another significant milestone in our efforts to expand access to ethical, Shariah-compliant financial solutions, while contributing to greater financial inclusion and long-term financial preparedness for our customers.’

LOLC Life Assurance Chief Operating Officer Jayantha Kalinga said: ‘The introduction of LOLC Life Family Takaful enables us to offer our customers a wider range of financial planning choices that respond to their diverse needs and aspirations while providing meaningful financial protection to their loved ones. Through our dedicated sales force and extensive reach, we are committed to increasing awareness of Takaful solutions and empowering individuals and families to make informed and responsible financial decisions.

Prime Lands Residencies PLC, the real leader in the modern real estate has been recognized as the Most Valuable Real Estate Brand in Sri Lanka for 2026 by Brand Finance, the world’s leading independent brand valuation consultancy. This prestigious recognition underscores the company’s leadership in the Sri Lankan real estate sector and reflects the enduring trust, confidence, and loyalty it has built among customers over the past three decades.

The Brand Finance rankings are globally respected for evaluating brands based on financial performance, brand strength, and the ability to create long-term value. Being named Sri Lanka’s Most Valuable Real Estate Brand is a testament to Prime Residencies’ unwavering commitment to excellence, innovation, quality, and customer satisfaction.

As the residential arm of Prime Group, Prime Lands Residencies PLC has played a pivotal role in shaping modern living in Sri Lanka. Through its portfolio of premium condominium developments, the company has consistently delivered homes that combine superior design, strategic locations, quality construction, and lasting investment value. Today, Prime Residencies continues to redefine the residential landscape with several landmark developments across the country, over 55 apartment projects across Colombo and its suburbs, with 47 already completed and delivered on time with unmatched reliability.

Commenting on the achievement, Executive Director of Prime Group, Mrs. Shehana Brahmanage, stated:

“Being recognized as Sri Lanka’s Most Valuable Real Estate Brand is a proud milestone for our entire team. This recognition belongs to our customers, employees, partners, and stakeholders who have placed their trust in us throughout our journey. It motivates us to continue raising the bar in the real estate industry by delivering exceptional developments, creating lasting value, and fulfilling our promise of excellence.”

The recognition further strengthens Prime Lands Residencies’ reputation as one of Sri Lanka’s most trusted developers. Over the years, the company has successfully completed more than 70 residential developments, while Prime Group has delivered over 10,000 land development projects, transforming the lives of thousands of Sri Lankan families through quality real estate solutions.

The accolade also reflects the company’s continued momentum on both local and international stages, following a series of prestigious awards that recognize excellence in real estate development, innovation, and marketing. As Prime Lands Residencies continues to expand its portfolio and strengthen its presence in local and overseas markets, the company remains committed to creating exceptional living spaces while contributing to the growth of Sri Lanka’s real estate sector.

This latest recognition as Sri Lanka’s Most Valuable Real Estate Brand for 2026 reaffirms Prime Residencies’ vision of delivering enduring value through trust, innovation, and uncompromising quality.