Sri Lanka has established a Tax Policy Analysis Unit (TPAU) within the Department of Fiscal Policy in the Ministry of Finance, following recommendations from the International Monetary Fund (IMF). This initiative aims to enhance the country’s tax policy framework.

The TPAU’s primary functions include conducting revenue analysis, evaluating the economic and distributional impacts of tax policies, assessing tax expenditures, engaging with key stakeholders, and analyzing international taxation and regional and international tax cooperation. These efforts are intended to support the design, appraisal, and monitoring of tax policy reforms through evidence-based analysis and internationally accepted methodologies, according to a statement from the ministry.

The IMF facilitated a capacity-building training program for the unit from January 19 to January 30. Upon the program’s conclusion, the IMF Mission Team met with the Secretary to the Treasury and the Director General of the Department of Fiscal Policy. During this meeting, discussions focused on the operationalization of the unit and its role in supporting evidence-based tax policy reforms.

The establishment of the TPAU was highlighted as a critical component of Sri Lanka’s reform agenda in the IMF’s March 2023 Staff Report. This report was part of Sri Lanka’s request for an Extended Fund Facility (EFF) arrangement, aimed at restoring macroeconomic stability, ensuring debt sustainability, and implementing structural reforms.

(Colombo/Feb3/2026)