An Right to Information (RTI) inquiry has revealed that the Hambantota International Port Group (HIPG), operated by a Chinese company, has evaded Municipal Council assessment taxes totalling over LKR 125.9 million, according to a report citing official records. The outstanding balance stood at LKR 125,938,793.50 as of 31 December 2025, inclusive of warrant charges and penalty interest.

Scale of the Tax Arrears

Official records cited in the report show the Hambantota Municipal Council had issued a Red Notice to the port management, seeking confiscation of the property under the Municipal Councils Ordinance for an outstanding amount of LKR 85,292,529 — overdue by two quarters. The council subsequently clarified in writing that, despite earlier discussions at council meetings referencing tax arrears exceeding LKR 250 million and Red Notices worth LKR 140 million, the confirmed current outstanding dues do not exceed LKR 250 million.

Port Management Obtains Legal Injunction

The HIPG management obtained an interim injunction against the council, preventing the municipality from classifying the premises as a 'commercial port' and from proceeding with property confiscation. In response, the council engaged a private law firm to represent it in the appeal, paying LKR 1 million from municipal funds as legal fees — a move that itself raises questions about the use of public resources.

RTI Requests Stonewalled

In response to a detailed 10-point RTI application on the tax evasion matter, the Hambantota Municipal Council refused to answer most questions. It declined to provide certified copies of the final official valuation report of the port premises and the Red Notices, citing 'confidentiality' concerns. According to the report, the council also refused to share copies of petitions related to the ongoing Court of Appeal case, interim injunctions, and the procurement process through which the private law firm was selected.

Broader Context: China's Hambantota Lease

The Hambantota International Port has been at the centre of geopolitical scrutiny since Sri Lanka leased it to China Merchants Port Holdings for 99 years in 2017, amid a debt crisis. Critics have long argued the arrangement gave China significant strategic leverage in the Indian Ocean. The latest tax evasion findings add a new dimension to concerns about accountability and transparency in the port's operations under Chinese management. The council's refusal to engage with RTI requests compounds those concerns, suggesting a lack of oversight over a facility of considerable geopolitical significance.

What Happens Next

The Court of Appeal case regarding property classification and confiscation proceedings remains ongoing. The outcome could determine whether the Hambantota Municipal Council can enforce its tax recovery mechanisms against the port — or whether the injunction will continue to shield HIPG from municipal authority. Transparency advocates are likely to push for fuller RTI compliance as the legal process unfolds.