The government, which used IT professionals and digital creators in a very shameful manner for its election campaign, is now preparing to attack them, says United Republican Front leader Patali Champika Ranawaka.
Speaking further at a media briefing, he pointed out that the government, which is afraid of imposing a corporate tax on huge companies, has imposed a tax on the creative community. He alleges that the government, which has destroyed the green energy sector and joined hands with the diesel mafia, is now trying to destroy the IT and digital industries as well.
Mr. Ranawaka further commented:
“The government has recently made an announcement through a gazette notification regarding the taxes they are going to impose on export services. There are two elements to this tax policy.”
Commenting on the proposed 18% VAT, Mr. Patali Champika Ranawaka stated that the discussion on this tax levied on service providers providing digital services and other related services to Sri Lanka has been going on since 2023. Problems have arisen regarding the levy of taxes on giant companies such as Facebook, YouTube, and Google that provide services to Sri Lanka. The main reason for this is that these companies do not have representative offices in Sri Lanka. Proposals have been made that these companies should be levied a tax since they provide services in Sri Lanka. Mr. Patali Champika Ranawaka also stated that the Asian Internet Organization has agreed to levy VAT on these companies.
“This VAT is planned to be collected and paid by the consumer.”
“The next one is the tax that will be levied on service providers as an income tax. The Janatha Vimukthi Peramuna/National People’s Power is coming to power. Now, what has become a joke today is the engineering service policy statements that were made when the National People’s Power came to power. All of this has become a joke today. These are the ones that have become a lie, a joke, and a joke with every letter. This is mentioned. A number of things about digital services, the first one is, Increase Annual Revenue of IT industry from 1.2 billion to 5 billion by 2030. This is not their goal. This is what Sluscom has been saying for a long time. Next is, Increase the workforce from 85,000 to 150,000 by 2030. This is the process. What are they going to do now? They are going to attack these 85,000 as well. They are using these people in a very shameful way for their election campaign, increasing their ratings, changing algorithms, creating an additional level in society, and are now doing so.”
He also pointed out that imposing new taxes on digital creators will hinder their growth. Mr. Patali Champika Ranawaka stated that these creators are a group that has come forward through self-education and self-employment, and that they are earning dollars for the country. They do not have pensions or employee provident funds. He further pointed out that the imposition of this tax will put another burden on the common people and that the government is allowing the rich to evade paying taxes.
“What has this proletarian government done now? The government, which is afraid of imposing corporate taxes on those huge companies, has now imposed taxes on this common creative community. Isn’t this what happened in the past? Isn’t that what happened in the past seventy-six years? Imposing taxes on top of taxes on the common people. In fact, this government has taken the necessary steps to destroy another powerful sector through this. They are joining hands with the diesel mafia to destroy the green energy sector, solar wind, and energy sectors of this country. The huge industry that was built through that collapsed and the Ceylon Electricity Board is being destroyed by importing oil and coal from abroad in dollars instead of the electricity it received for free. It is a modern industry. Green energy is a modern industry. That modern industry has been destroyed. Now they have laid hands on these internet industries.”
He emphasized that the future of the country’s economy should be built through technology services and the government should provide incentives for that. Mr. Ranawaka, who accused the government of imposing taxes on the general public despite the International Monetary Fund’s proposal to impose a wealth tax, pointed out that the government is trying to impose taxes on those who evade taxes through foreign accounts, and that although it is a good thing, it is doubtful whether it will be successful in practice. Mr. Ranawaka is of the opinion that the country receives a lot of money from Sri Lankans abroad and imposing taxes on them could hinder that.
Mr. Patali Champika Ranawaka answered questions posed by journalists;
Question:
According to the information we gathered, it was reported that the first LKR 150,000 is exempt from this tax, after which a 6% tax is applied to a certain amount. Is that correct?
Answer:
Currently, as per the Gazette notification, this tax applies to income, specifically dollar income. If this dollar income is considered taxable under income tax, then that is the method being followed. However, the Gazette notification clearly mentions the 15% tax. The exemption of the first LKR 150,000 should align with other existing laws in the country, but that is not the main issue here.
The concern is not about rupees being restricted but about dollars being controlled. There are multiple ways for dollars to be moved through channels outside the purview of the Inland Revenue Department. The government lacks a mechanism to prevent this. As a result, a significant number of people are being pushed into the country’s shadow economy, or the black market.
If revenue was indeed being generated through this tax, it is unclear how many millions of dollars Sri Lanka was receiving through these services. The IT industry was bringing in approximately $1.2–$1.3 billion annually, with a plan to increase it to $5 billion. However, when this tax was first introduced, Presidential candidate Anura Dissanayake stated it would be implemented. Now, an entirely different process has been put into effect.
Often, we only learn about these tax implementations and salary increases when they take effect. Currently, two types of taxes have been introduced. It remains unclear whether VAT will apply to this, or if it will be passed on to consumers. Additionally, how this will affect services provided from Sri Lanka to foreign clients is uncertain. Some claim it applies only to specific cases and does not affect those with permanent contracts. Regardless of these arguments, we do not yet know how the Inland Revenue Department will enforce this tax.
Typically, after a budget is passed, specific official announcements are made, clarifying revenue collection targets for the Inland Revenue Department. At that point, we can determine how much revenue is expected from different sectors. However, at present, neither the Inland Revenue Department nor the Customs Department has been given specific revenue targets. This makes it difficult to predict the expected revenue from taxes on vehicle imports or other sectors. Only the Ministry of Finance has this information, which will only become clear once the budget is finalized and targets are set.
Question:
Some argue that those earning in rupees pay taxes, so why shouldn’t those earning in dollars pay a 15% tax? That is the government’s justification. Does the government or its institutions have a system to identify these individuals?
Answer:
Yes, such a system is currently being implemented. Individuals are required to register through their bank accounts, creating separate accounts to track these earnings. However, it is unclear how effectively this system will function within the first eight months, starting in April. The Inland Revenue Department must ensure proper registration.
This is evident from what happened during the first round of tax applications, when payments were made in the first month. By the following month, however, a significant number of individuals had moved their accounts abroad or shifted to permanent and contract-based jobs elsewhere, continuing to receive payments through alternative means.
People in this sector understand international financial operations well. Unfortunately, it appears that some political leaders in the government lack this knowledge. Those affected by the tax know how to work around it, meaning the government must collaborate with them rather than impose rigid measures.
Ideally, Sri Lanka should engage in discussions with international alliances on corporate taxation. India has done this, yet Sri Lanka remains one of only six countries in the world that have not joined the multilateral coalition for corporate taxation. Instead of negotiating with multinational companies to collect fair taxes, the government is burdening individuals who use these services. This demonstrates a lack of strategic planning.
Question:
If professionals and industries impacted by this tax decide to leave Sri Lanka, won’t they move their operations to other countries?
Answer:
This is already happening. It is not just a hypothetical scenario. Thousands of Sri Lankan companies have registered in Dubai alone, especially during the country’s recent economic crisis. More will follow, setting up companies abroad and providing services through those entities.
Once this happens, intermediaries will emerge—agents who help with company registrations, financial transactions, and money transfers. Sri Lanka already has tens of thousands of reliable money exchanges capable of transferring money anywhere in the world.
If the government truly wants to control this, it must regulate these money exchanges, particularly in areas like Fort, Wellawatte, and Negombo. This would require a comprehensive policy, but instead, the government has created a poorly planned tax scheme with no clear implementation strategy.
Question:
If you were in government, what approach would you take regarding this issue? Also, what is your stance on cryptocurrency?
Answer:
Cryptocurrency is a global reality. Any government in power must recognize this and establish proper regulations. If we were in power, we would engage directly with multinational corporations, ensuring they register in Sri Lanka and pay taxes here. Unfortunately, this government is reluctant to do so, as it serves the interests of a small elite rather than the broader economy.
Cryptocurrency has been widely debated, with both positive and negative perspectives. However, it exists as a form of virtual currency worldwide. There has been a proposal to establish a Crypto Agency in Sri Lanka’s Port City, but without a solid regulatory framework, this could become as problematic as the casino industry, which currently operates with little oversight.
Sri Lanka has many talented individuals involved in cryptocurrency and Bitcoin businesses. Some engage in Bitcoin mining, which requires substantial energy. Given Sri Lanka’s current energy constraints, this is a challenge. Even the United States plans to increase its energy production by 40% over the next decade to accommodate this sector.
Therefore, a comprehensive national strategy is needed. Simply discussing cryptocurrency without addressing energy needs, operational frameworks, and regulations is meaningless. We must establish clear regulatory policies, just as we should for casinos.
