LNP – Foreign digital service providers can retain overseas earnings amid tax increase: Handunneththi

The tax burden on individuals providing services to foreign countries while residing in Sri Lanka has increased. However, they have the option to keep their income abroad without bringing it into the country. Industry and Entrepreneurship Development Minister Sunil Handunneththi said that he does not agree with this tax.

He made this comment while participating in a television programme last night in response to a journalist’s question regarding the 15% tax to be imposed on digital service export providers.

“There should be a profit-based system for these individuals, ensuring the declaration of income generated for Sri Lanka. If they choose to keep their earnings abroad, then imposing taxes will be ineffective,” he said.Â

He also noted that the tax amount may vary depending on the type of services provided.

The Minister claimed that some individuals do not wish to disclose their income. Existing laws require funds sent abroad to be repatriated within 180 days. However, in reality, these earnings often bypass official channels and do not enter the country through the Sri Lanka Customs.

“As a Minister, I do not agree with the 15% tax imposed on digital service export providers. These individuals work silently, without receiving any benefits from the government. Therefore, they should be encouraged to bring their earnings into the country rather than being burdened with additional taxes,” he said.

He also said that digital service providers do not require capital or land from the government, nor have they received or requested government training. All they need is a tablet and a desk, yet they provide invaluable services to the global market.Â

“When formulating policies, we must focus on the best ways to generate revenue for the government,” he said.

In general, the Minister argued that imposing a 15% tax is a barrier to the technology sector and those providing engineering services, especially as Sri Lanka moves toward a knowledge-based economy.