The Tourism Development Levy, charged on licensed tourism businesses since 2003, will be abolished with effect from 1 April 2027 under the 2027 Budget proposals.
The levy was imposed under the Finance Act No. 25 of 2003, and the budget terminates it outright rather than reducing it, the Daily Mirror reported.
What the levy was
The TDL is charged on the liable turnover of businesses registered with the Sri Lanka Tourism Development Authority (SLTDA), at one of two rates depending on size, according to EconomyNext:
- 1.0 per cent on SLTDA-licensed institutions with annual turnover above Rs 12 million
- 0.5 per cent on SLTDA-licensed institutions with annual turnover of Rs 12 million or less
It generated Rs 2.58 billion in 2024. EconomyNext reports the levy was originally imposed to fund community-focused tourism development, strategic marketing and infrastructure improvements, and to support what it describes as sustainable growth of the sector while strengthening Sri Lanka’s global tourism brand.
The budget presents the abolition as a competitiveness measure for the hospitality sector, removing a turnover-based charge that applies regardless of whether an operator is profitable.
Context
The removal is one of several sector-specific tax changes in a budget that also raises the personal income tax-free threshold, exempts books from VAT and cuts CESS rates on 800 import lines. The headline fiscal frame — revenue of Rs 4.99 trillion against expenditure of Rs 7.19 trillion — is covered in Budget 2027 presented.
Not reported
Neither filing states what replaces the TDL as a funding source for the SLTDA’s marketing and tourism infrastructure work, nor how the Rs 2.58 billion gap will be met. Neither gives the levy’s more recent collection figures — 2024 is the latest year cited — and neither says whether SLTDA registration requirements themselves change. No tourism industry body is quoted in either report.
