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UNDP and South Centre organise capacity building workshop on taxation for Lankan Govt
The United Nations Development Programme (UNDP), through its Tax for SDGs Initiative, and the South Centre, Switzerland jointly organised a two-day capacity-building workshop on “Taxation of the Digitalised Economy” for nearly 100 officials from the Fiscal Policy Department (FPD), Inland Revenue Department (IRD), the Ministry of Finance and key private sector actors in the digital space in Sri Lanka.
The UNDP Tax for SDGs Initiative in collaboration with the South Centre’s Tax Initiative support developing countries in increasing Domestic Resource Mobilization (DRM) and achieving the Sustainable Development Goals. Domestically mobilized revenues, which form the bedrock of both development and climate finance, have been severely impacted even as they have become even more important for the recovery efforts and for reviving investments in economic and social development. In this regard, the workshop was organized at an opportune moment as Sri Lanka embarks on a path to economic recovery and course correction, particularly addressing structural issues pertaining to government revenue. Globally too, countries are increasingly focusing efforts to strengthen domestic resource mobilization as they chart up ways to manage the severe dent caused by multiple crises.
The workshop provided a unique opportunity for stakeholders to exchange and interact with their peers and international experts on the tax challenges arising from the digitalized economy. More specifically, the workshop focused on:
(1) policy options for taxing the digitalized economy, especially Multinational Enterprises (MNEs) supplying digital services such as online advertising and platform intermediation
(2) designing a minimum effective corporate income tax
(3) presenting ongoing discussions at the global level on taxing the digitalized economy
(4) obtaining evidence and perspectives of Sri Lanka on taxing the digitalized economy
(5) creating an inclusive platform for peer learning and exchange through the knowledge & experiences of the workshop participants
The workshop commenced with opening remarks by Ranjith S. Hapuarachchi, Commissioner General, IRD. He highlighted the need for tax administration to augment revenue collection in times of the ongoing fiscal challenges in Sri Lanka and expressed hope that the workshop would be able to lay the necessary roadmap and suggest measures for the Sri Lankan administration to tax income of digital companies that is sourced from Sri Lanka.
The highly interactive workshop delivered by Sudarshan Kasturirangan, Regional Programme Specialist, Asia and the Pacific, UNDP, Abdul Muheet Chowdhary, Senior Programme Officer and Kuldeep Sharma, Research Consultant – Tax, South Centre, commenced with an examination of the domestic measures being undertaken in various countries such as Digital Services Tax (DST), Equalisation Levy (EL) and Significant Economic Presence (SEP). This was followed by an in-depth examination of the treaty-based solutions available, namely Article 12B of the UN Model Double Tax Convention (UN DTC) which provides a solution for taxing income from Automated Digital Services (ADS). ADS especially include services such as online advertising, search engines, intermediation platforms, social media platforms, online gaming and cloud computing.
The workshop also covered treaty-based solutions under the UN DTC for taxing income from payments for the use or the right to use computer software under Article 12 (Royalties). This was combined with a session on Article 12A (Fees for Technical Services) which covers income from managerial, technical and consultancy services and are often delivered online. There was a considerable amount of deliberations on the ongoing work in these areas at the UN Tax Committee and its significance for developing economies like Sri Lanka. Central to the discussion was also on the existing treaty framework in Sri Lanka concerning taxing royalties and fees for technical services.
Speaking to the success of the event, N.M.M. Mifly, Deputy Commissioner General, IRD concluded the workshop by stating that the insights gained would empower the participants in enhancing their understanding of the ever-evolving tax landscape and the core rules regarding taxation of the digitalised economy that have been formulated recently and those under the process of formulation.
In particular, Mifly appreciated the UN Tax Committee, UNDP and the South Centre for providing coherent guidance and options to the Government of Sri Lanka and developing countries in general, and requested that more such workshops be held in the future.
The successful conclusion of the workshop under the UNDP Tax for SDGs Initiative and the South Centre laid a firm foundation for the series of joint engagements planned between the two organizations to support the Government of Sri Lanka and deepen collaboration in this field. These include a review of Sri Lanka’s tax treaty network, the design of a Model Tax Treaty for the country and capacity building on tax treaty negotiation. Technical meetings with the stakeholders will be organized in the coming months to discuss the progress made and the challenges faced during implementation.
News
President proposes; Speaker disposes
AKD’s request to Harsha:
Speaker Dr. Jagath Wickramaratne has frustrated an attempt by Chairman of the Committee on Public Finance (CoPF) Dr. Harsha de Silva, MP, to intervene to settle the continuing dispute over the appointment of a new Auditor General.
Dr. De Silva yesterday told The Island he had recently written to all members of the Constitutional Council (CC) drawing their attention to the urgent need to address the issue at hand. The AG’s position remains vacant since 08 Dec, 2025. AG W.P.C. Wickremanayake retired in April and since then there have been a couple of Acting appointments. The CC has declined to endorse any of President Dissanayake’s nominees as the AG.
Asked whether he had taken up the issue with the CC following President Anura Kumara Dissanayake soliciting his support in this regard, MP de Silva said that he had written to CC members as agreed with the President.
The former UNPer and one-time State Minister said: “I did so, giving due respect to CC’s independence, underscoring the critical importance in them working with the President to resolve the crisis. I alluded to the need to have transparency in public financial management during this post-cyclone period where large amounts of funds are being transacted on multiple fronts, both domestic and foreign.”
Responding to another query, Dr. De Silva emphasised that he had clarified that the President must send the names of qualified and experienced persons to the CC for consideration. “However, these letters were returned to me by the Speaker, without being delivered to members of the CC. The Speaker didn’t give an explanation. Thus, except for members who are MPs who had been copied via email by my committee office, others never received my letter of concern. Even though I questioned, in Parliament, the basis of his refusal to forward my communication to the members of the CC of which he is Chairman, no answer was given.”
The CC consists of Dr. Jagath Wickramaratne, Speaker and Chairman of the 10-member body. Dr. Harini Amarasuriya, Prime Minister, Sajith Premadasa, Leader of the Opposition, Bimal Rathnayake, Aboobucker Athambawa, Ajith P. Perera, Sivagnanam Shritharan, and three civil society members namely Dr. Prathap Ramanujam, Dr. Dilkushi Anula Wijesundere and Dr. Dinesha Samararatne. None of the President’s nominees could obtain CC’s approval as all of them were rejected by the CC.
The present CC was introduced by the 21st Amendment to the Constitution which was endorsed on 31 October 2022.
Both the Bar Association of Sri Lanka (BASL) and the Transparency International Sri Lanka Chapter recently requested President Dissanayake, in writing, to propose a suitable person to the post of AG. The BASL, in another statement that dealt with the forthcoming vacancies in the CC due to three civil society members completing their terms, declared its concern over possible attempts by the President and the NPP government to fill the vacancies with rubber stamps.
The three civil society members will complete their terms on 18 January. In terms of Article 41E of the Constitution, the CC meets at least twice every month, and may meet as often as may be necessary. The Chairman presides at all meetings of the CC and in the absence of the Chairman, the Prime Minister, and in the absence of the Prime Minister, the Leader of the Opposition presides at the meetings of the CC.
Asked whether the CC could be disrupted due to the end of civil society members’ terms, an authoritative official pointed out that in case new appointments were not made the current members could continue.
The Parliament has not so far called for applications to fill the forthcoming vacancies.
by Shamindra Ferdinando ✍️
News
Sri Lanka loses Rs.7.5 bn due to coal tender irregularities: FSP
The NPP government’s coal procurement process has once again come under scrutiny following allegations by the Frontline Socialist Party (FSP) that substandard coal has been imported for power generation and that tender procedures were manipulated to favour a specific supplier.
Addressing the media after a party meeting in Maharagama on Saturday, FSP Education Secretary Pubudu Jagoda said a test report issued by the government laboratory at the Lakvijaya Power Plant had confirmed that the latest coal shipment unloaded in Sri Lanka did not meet the required quality standards. According to the report, the coal’s calorific value ranged between 5,600 and 5,800 kilocalories per kilo, below the 5,900–6,200 kCal/kg range specified in tender requirements.
Jagoda warned that lower calorific value coal would require higher volumes to generate the same amount of electricity, increasing costs significantly. Preliminary estimates, he said, indicated an additional financial burden of around Rs. 7,500 million, which might eventually be passed on to consumers through higher electricity tariffs.
The FSP also accused the government of tailoring procurement rules to benefit the Indian supplier, which has deposited bonds for long-term coal supply for the upcoming season. Jagoda alleged that tender conditions had been altered to accommodate the company, pointing to changes in coal reserve requirements. Under the 2021 Sri Lanka Coal Registration Document, suppliers were required to maintain a minimum reserve of one million metric tonnes with a gross calorific value of 5,900 kCal/kg. This threshold, he said, had been reduced to 100,000 metric tonnes in the 2025 document which is a 90% reduction raising serious concerns.
He further cited past allegations against the Indian company, including findings in a 2016 Auditor General’s report that the company violated procurement guidelines regarding a rice supply contract with Sathosa in 2014. Jagoda also referred to legal issues involving individuals linked to the company, and the suspension of a representative by the International Cricket Council in 2019 over match-fixing allegations.
Beyond company-specific concerns, Jagoda criticised what he described as systemic manipulation of the coal tender process. He questioned why the coal tender, typically called in February or March, was delayed until July, despite electricity being declared an essential service. He also alleged that the tender submission period had been progressively shortened from the internationally accepted six weeks to five weeks, and now reportedly to three giving an unfair advantage to suppliers with existing stock.
The Ministry of Energy has recently issued an amended tender to procure 4.5 million metric tonnes of coal for the Lanka Coal Company for the 2025/26 and 2026/27 periods, following the cancellation of an earlier tender.
Jagoda warned that delays and irregularities could lead to coal shortages, higher spot market purchases, increased electricity costs, and even power cuts if hydropower generation falls short. He called for urgent investigations into the procurement process, insisting that the burden of alleged mismanagement and corruption must not be transferred to the public.
by Chaminda Silva ✍️
News
CID summons SJB MP for criticising education reforms
SJB Gampaha District MP Prasad Siriwardhana has been summoned to the CID today (12) for questioning in connection with a statement he made on a private television channel regarding education reforms.
He was earlier asked to report to the CID on 10 January to make a statement. However, as Siriwardhana had notified the authorities that he was unable to appear on that day, he was subsequently asked to come today.
Siriwardhana is one of the critics of the shortcomings of the education reforms introduced by the NPP government.
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