The Cabinet of Ministers has approved an amendment to the Finance Act No. 35 of 2018 that will exempt newly constructed telecommunications towers from the annual Rs. 200,000 per-tower tax for a period of five years.
Under the current law, mobile network operators pay the fixed annual levy on every tower they possess. The amendment, drawn from the 2026 Budget, specifies that “the said tax shall not be levied for a period of five (5) years in respect of telecommunication towers newly erected on or after 2026-01-01,” The Island reported.
The Legal Draftsman has prepared the draft bill and the Attorney General has already cleared it. Cabinet has now authorised publication in the Government Gazette, after which the amendment will be submitted to Parliament for concurrence.
The exemption is designed to lower the capital cost of expanding mobile coverage and to encourage operators to build out the infrastructure needed for higher-speed networks. It sits alongside the government’s broader digital infrastructure push, which includes the UDI biometric identity programme, the GovTech app marketplace, and the Digital Governance Bill currently moving through Parliament.
Budget 2026 presented the tower tax waiver as a targeted incentive for telecoms operators that were facing rising site-acquisition and energy costs. Industry bodies had long argued that the flat per-tower levy penalised coverage expansion into rural areas where revenue per site is lower.
Existing towers remain liable for the annual tax. The amendment applies only to masts constructed on or after January 1, 2026, meaning operators will need to document the commissioning dates of new builds to claim the exemption.
Update — June 9: The Committee on Public Finance (CoPF), chaired by SJB MP Dr. Harsha de Silva, on Tuesday endorsed the Finance (Amendment) Bill incorporating the five-year tower tax waiver, Newswire reported. The committee also reviewed companion amendments to the Telecommunications Levy Act No. 21 of 2011 aimed at updating the legal framework governing telecom taxes and improving transparency in tax administration. However, the CoPF rejected a separate industry proposal that would have let telecom operators claim tax deductions on unpaid customer bills, ruling that granting such relief to a small number of large companies would be unfair when similar concessions are unavailable to smaller businesses. Companies are responsible for collecting taxes from customers and any failures in collection should not reduce government revenue, the committee said, sending the proposal back for further clarification.
