Businesses face lower SSCL entry threshold from July 1

By Shannine Daniel

Lower registration thresholds for the Social Security Contribution Levy (SSCL) will take effect from July 1, under the amendments to the SSCL Act, notified by the Speaker of Parliament earlier this month.

The changes will require the businesses with a quarterly turnover exceeding Rs.9 million to register for the levy, down from Rs.15 million, while the annual threshold has been reduced to Rs.36 million, from Rs.60 million. 

Separate amendments relating to the import and supply of motor vehicles will come into force from May 1.

The Inland Revenue Department (IRD) said any taxable person, whose turnover exceeds or is expected to exceed Rs.9 million, must register for the SSCL within 15 days of crossing the threshold.

The registered persons must therefore pay the SSCL for the liable turnover from July 1, 2026 onwards.

Furthermore, the previous SSCL exemption on motor vehicles imported under Item 25 of Part 1A of the first schedule of the SSCL Act will be removed from May 1, 2026 onwards.

Accordingly, from May 1, 2026 onwards, the imported vehicles will be subjected to the SSCL from the point of importation.

A new exemption will be introduced under Item 7 of Part 1B first schedule, for wholesale and retail sales of motor vehicles within Sri Lanka, effective from the above-mentioned date onwards.

The National Budget proposed to lower the annual turnover threshold for the mandatory VAT and SSCL registration from Rs.60 million to Rs.36 million, effective from April 2026.

Moreover, according to IRD Senior Commissioner A.M. Nafeel, levying the SSCL at the point of import or manufacture and sale of vehicles would “benefit the importers and vendors”.

He made this statement at a budget forum organised by KPMG Sri Lanka last year.

Moreover, as reported by Mirror Business in February, industry representatives warned the government that the combined effect of the SSCL and VAT will substantially increase the overall tax burden on vehicle imports, particularly if the SSCL is collected at the import on 100 percent of turnover.

They noted that the net impact on total customs duty would be far higher than initially anticipated and would spark concerns of a stealthy tax hike that the buyers and importers may not fully grasp.