• Fresh provisions to target illegal foreign-run businesses 
• Informal sector registration, regulation to be addressed
• Double taxation by Tourism authorities and LG bodies to be addressed 

The Ministry of Tourism has announced that sweeping reforms will be introduced through a proposed new Tourism Act, now in the drafting stage, aimed at strengthening regulation and enforcement within the tourism sector.

Speaking to The Daily Morning yesterday (23), Deputy Minister of Tourism Prof. Ruwan Ranasinghe said the new legislation is designed to modernise the legal framework governing the industry, which he noted has evolved significantly over the past two decades.

“The existing laws, Tourism Act No. 38 of 2005, is over 20 years old and no longer adequately addresses emerging industry trends, technological developments, and contemporary regulatory needs,” Prof. Ranasinghe said.

He explained the current law, the, requires urgent revision to ensure the sector remains competitive, transparent, and effectively monitored.

Minister Ranasinghe pointed out the new Act seeks to address the growing number of foreigners, primarily from Russia and European nations, who are entering Sri Lanka and establishing businesses illegally. He said that the current Legislation lacks the provisions necessary to take punitive action against such individuals. 

“What we do currently is to identify the situation as an overstay and to take action against them via the Immigration and Emigration Law regarding visa violations. That process is too complicated and has to involve the Immigration and Emigration officers as well,” he explained, adding, “Hence, we will be enforcing the proposed Tourism Act in a way the Tourism Department can directly take actions against them.”

The minister also highlighted the rapid expansion of the informal sector within the tourism industry as a major issue expected to be resolved via the new Act. “Only about 10 per cent of those providing tourism-related services are currently registered with the Tourism Development Authority (TDA). The proposed Act aims to bring this informal sector under regulatory oversight,” he added. 

Addressing long-standing grievances from the private sector, he said the new Legislation seeks to resolve the issue of double taxation. “Currently, entities registered with the TDA are required to pay a 1% Tourism Development Levy on their revenue. Simultaneously, Local Government (LG) Authorities levy an additional 1% under their own statutes,” he detailed. "One of the complaints that we receive from the private sector is that they are ‘double-taxed’," he said. "We are expecting to find solutions for this issue as well via the proposed Tourism Act," he concluded. 

When questioned about the prevalence of foreign backpackers in the country, he said that while the overall increase in tourist arrivals has naturally led to a higher number of such individuals, and social media has amplified the visibility of the trend, it does not signify an issue of tourists spending less or an influx of low-economic-value visitors to Sri Lanka.