No provisions for taxing cryptocurrencies in Budget 2026, says tax expert

• Calls for amendment to Inland Revenue Act, so taxes on crypto can be collected in an efficient manner

By Shannine Daniel 

Suresh Perera

The 2026 national budget does not have any provisions for the taxing of cryptocurrency and other areas which are not being taxed, said KPMG Sri Lanka Head of Tax and Regulatory Suresh Perera.

“We should not be taxing the same people. There are many areas where taxes are not being imposed or areas where taxes are being imposed but the revenue is not being collected. One such area is cryptocurrency,” Perera said, calling for legislation where new taxpayers can be brought in. 

He made these comments at a recent panel discussion organised by KPMG Sri Lanka to share insights on the 2026 national budget proposals. 

“A slight amendment is needed in the Inland Revenue Act to ensure that there will be a proper and efficient manner in which taxes on cryptocurrency can be collected. I expected this to be part of Budget 2026 but I do not see this expressively,” he stressed.

Perera said the latest budget has proposed necessary legal provisions to be introduced in all tax legislations for enforcement, including the interpretation of tax-related crimes, prosecution by the Attorney General and imposition of fines and penalties. 

He noted that this is a very vague proposal in terms of taxes but is hopeful that express tax legislation would be introduced to the Inland Revenue Act soon, so the taxpayers would be clear on the manner in which they should comply with the cryptocurrency (crypto) activities in Sri Lanka. 

In the recent past, Perera has been ardently speaking and writing on Sri Lanka’s need for express legislature in taxing cryptocurrency.
In a recent post for the E-Tax Forum, Perera wrote, “Sri Lanka’s existing tax framework, while comprehensive for traditional assets and income sources, lacks the specificity and agility required to regulate crypto effectively.” 

He added that a lack of clear definitions, thresholds and reporting obligations tailored for crypto would lead to inconsistent compliance and more opportunities for evasion or misclassification. 

He also noted that a “dedicated crypto tax legislation would not only enhance legal certainty but also signal Sri Lanka’s readiness to embrace digital finance responsibly”. 

As reported by the Daily Mirror last month, there is no legislation in Sri Lanka that currently governs cryptocurrency or virtual assets. 

Perera called for a bespoke framework that can define taxable events, valuation methods, exemptions and penalties in line with the global best practices such as those adopted by the UK, Australia and India. 

“This would empower the Inland Revenue Department to build capacity, issue guidance and collaborate with the Central Bank and Financial Intelligence Unit on anti-money laundering and countering financing of terrorism framework integration,” he wrote.

In Sri Lanka, crypto or virtual assets are completely prohibited for payments. The Central Bank has also warned the potential investors against investing in them as an asset, due to the extreme price volatility.