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Lanka’s tax hike could force professionals to migrate – analysts 

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By SHIHAR ANEEZ

ECONOMYNEXT – Sri Lanka’s proposed tax hikes could force professionals out of the country as they discourage people who want to earn more and expand businesses, analysts say.President Ranil Wickremesinghe, who is also the island nation’s finance minister, through a gazette has proposed new tax rates, which if passed would bring Sri Lanka’s tax structure almost in line with 2019 before former president Gotabaya Rajapaksa removed many taxes in December that year.

The increase of tax revenue has become a must after the island nation declared sovereign debt default in April and as it is seeking a backing from an International Monetary Fund (IMF) for a loan and reforms.Anybody who earns more than 100,000 rupees monthly will have to pay tax in the proposed new tax amendment. That amount is 40 percent of the earlier threshold. The tax slabs of 500,000 rupee is taxed at an incremental 6 percent up to 36 percent.In addition to this, the corporate tax has been increased to 30 percent from a maximum of 24 percent.

However, analysts say the proposed tax hike will be seen as a disincentive because President Wickremesinghe is bringing the 2019 tax rates after an economic crisis and when the inflation is running at 70 percent.

“The sharp increase in personal income tax rates would discourage employment, negatively affect lives of the middle-class families and specially in an environment of high inflation could increase brain drain,” Danushka Samarasinghe,  Chief Executive Officer/Director at Nation Lanka Equities (Pvt) Ltd told EconomyNext.

“Employees remain disproportionately affected since taxed at source with a sharp drop in disposable incomes which could also create a problem in personal debt servicing. This will be medium-long term negative for the country. A flat personal tax rate could have been more equitable and not discourage growth in incomes.”

He said the tax proposals “seem to be more of a knee-jerk measure in boosting government revenues” in the short term though it could have negative medium-long term impact.

“The 30% tax rate could be a disincentive for investment and job-creation. Sectors which enjoyed preferential tax treatment would be disproportionately affected though it could be argued as creating a level playing field, which is a positive. Question remains whether this would discourage export-oriented industries and trigger a shift.”

Sri Lanka’s tax to GDP ratio was 12.7 percent in 2019 when Wickremesinghe was ousted as the prime minister after his party lost the elections to former president Gotabaya Rajapaksa.The revenue, however, dropped to 8.7 percent of the GDP in last year after Rajapaksa slashed taxes despite warnings of consequences including a possible debt crisis.President Wickremesinghe has said the tax rates should be raised to 2019 level to increase the revenue.

“The 2019 tax system is not going to be the same now. Those higher tax rates were affordable at that time because the cost of living was lower and the inflation was 6-7 percent,” a financial analysts said asking not to be named.

“The new tax rates will force to reduce people’s disposable income and this will be a huge burden on the people who have been paying tax genuinely. Many professionals who want to stay in Sri Lanka and contribute to the economy will leave the country.”

Already Sri Lanka has seen many professionals leaving the country due to the unprecedented economic crisis and a prolonged political crisis with many uneducated lawmakers have been dictating what educated professionals must do with less participatory decision making, analysts say.They also said with prices of fuel, cooking gas, electricity, and water have been raised along with over 50 percent of depreciation in the rupee, many professionals have adjusted their consumption to suit the shrunk disposable income.

“These new tax hikes without considering the current inflation and cost of living will be the final nail in the coffin of the careers of professionals locally. They will look into migrate at any cost,” another analyst said.



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Sun directly overhead Bentota, Thiniyawala, Iththakanda, Udawalawe, and Kataragama about 12.08 noon t9day (06)

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The sun is going to be directly over the latitudes of Sri Lanka from  28th of August to 07th of September due to its apparent southward relative motion.

The nearest places of Sri Lanka over which the sun is
overhead today (06) are Bentota, Thiniyawala, Iththakanda, Udawalawe, and Kataragama about 12.08 noon

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UN welcomes Lanka’s anti-graft drive, seeks end to impunity

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MONETABRIEF –The UN human rights chief on Thursday welcomed Sri Lanka’s robust anti-corruption drive but urged President Anura Kumara Dissanayake to apply the same vigour to ending impunity for continuing rights abuses.

In its latest report to the UN Human Rights Council in Geneva, High Commissioner Volker Turk noted that cases of torture and deaths in custody continued to be reported in Sri Lanka despite the change of administration.

“While it is encouraging that the Sri Lankan authorities have taken action to address corruption cases and some crimes linked to the post-war period, more needs to be done to end the long legacy of impunity in the country,” the rights chief said.

His report, covering October 2025 to July 2026, notes steps to tackle corruption, including high-profile arrests and investigations linked to political killings, enforced disappearances and the 2019 Easter Sunday attacks.

He said it had been a difficult period for Mr Dissanayake’s new government, following the devastating Cyclone Ditwah which killed some 650 people and devastated much of the island and a global spike in energy prices.

The report noted that the Human Rights Commission of Sri Lanka had documented 602 cases of torture and ill-treatment in 2025 and 138 cases by April 2026.

The local commission also reported 18 deaths in custody last year and a further three by April this year. In one such case, a 40-year-old inmate detained for a minor drug-related offence died at Welikada Prison in Colombo on 3 May, allegedly from severe beatings.

“This Government still has an opportunity to turn the tide on decades of abuse of executive power, repressive laws and custodial violence, and entrenched impunity,” Turk said.

He regretted that the government had yet to deliver on its promise of legal and institutional reforms and continued to apply the repressive Prevention of Terrorism Act (PTA), resulting in arbitrary arrests and prolonged detention without charge.

Civil society actors, activists and journalists remained subject to state surveillance, while tensions over land and religious sites continued to simmer, the report said.

It also highlighted violent riots at Negombo Prison in July, which left at least 32 dead, underscoring the urgent need for prison reform to address systemic issues, including severe overcrowding.

The UN Human Rights Office had received at least 16 allegations of surveillance against civil society actors, activists and journalists, the report said.

There was “a clear and continuing pattern of state surveillance, intimidation and reprisals by military and intelligence officials, including from the Criminal Investigations Department or the Terrorism Investigation Division”.

“Individuals are repeatedly questioned about their travels, especially to Geneva and engagement with UN human rights processes, as well as their organizational affiliations, funding sources, and participation in protests or commemorative events.”

While the Government had continued to denounce racism and promote national unity, wider efforts to ensure truth and justice risked stalling and the momentum for transformative change being lost, the report warned.

Failures to effectively investigate and prosecute crimes under international law allegedly committed during the armed conflict persisted.

“It is crucial that there is decisive and meaningful action toward accountability for crimes and violations by all parties during the more than two-decade armed conflict,” Turk said.

He noted the recent decision by the Attorney-General to indict former Eastern Province Chief Minister Sivanesathurai Chandrakanthan, also known as Pillayan, and three others in connection with the abduction and murder of former Eastern University Vice-Chancellor Professor Sivasubramaniam Raveendranath in 2006.

“It is, however, regrettable that many other serious emblematic cases remain stalled for years, including the killing of 17 Action Contre La Faim aid workers in Muttur 20 years ago,” he said, calling for meaningful steps to resolve such delays.

The High Commissioner urged Sri Lanka to redouble its reconciliation and accountability efforts. He called for a moratorium on the use of the Prevention of Terrorism Act pending its repeal, as well as the release of long-term detainees held under it.

He also called for all individuals credibly accused of human rights violations to be excluded from senior positions in government, the security sector or the diplomatic service until such allegations were genuinely addressed and resolved.

He urged the Government to support victims’ memorialisation initiatives and to release military-occupied lands.

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Dispute which triggered listed company director being detained at BIA resolved

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A dispute between a wholly owned subsidiary  of Lanka Realty Investments PLC, Mulberry Holdings (Pvt) Ltd., and a contractor, Omni Engineering & Trading Solutions, that resulted in Executive Director Hisham Jamaldeen of Lanka Realty being stopped at Katunayake and prevented from leaving on a business visit to the UK has been resolved with Jamaldeen bailed and the travel ban imposed on him revoked by the Maligakanda Magistrate, Lanka Realty’s said in a Stock Exchange filing last week.

This followed Mulberry agreeing to pay Rs. 25 million to Omni on or before Sept. 26.

Following media reports of Jamaldeen being prevented from leaving the country at the BIA, Lanka Realty made two Stock Exchange filings on Sept. 3 – the first detailing the dispute between the two parties and the second indicating that the matter had been settled.

In the first filing, the Secretaries for Lanka Realty said:

“The article refers to Mr. Mohamed Hisham Jamaldeen, Executive Director of Lanka Realty Investments PLC and a Director of Mulberry Holdings (Pvt) Ltd, a wholly owned subsidiary of the Company and the developer of “Mulberry Residences” in Colombo 10.

“Mulberry Holdings (Pvt) Ltd entered into a construction contract with Mr. Randika of M/s Omni Engineering & Trading Solutions on 21st June 2022 for a sum of LKR 32,854,992.00), which is less than 1% of the total value of the “Mulberry Residences” Project which is around LKR 3.6 Billion.

“The said contract is governed by the CIDA/SBD1 Standard Bidding Document Conditions of Contract, which provides for adjudication and, if required, arbitration as the applicable dispute resolution process. The Company understands that the underlying matter relates to a contractual payment dispute involving Mulberry Holdings (Pvt) Ltd’s aforcsaid contract.

“Following a call received from the Colombo Crime Division (CCD), Mr. Jamaldeen went to the CCD on 25th August 2026 and provided a statement in relation to the matter inter alia explaining that the matter in dispute was arising from a civil contract. He was not arrested on that date and was not informed at that time or thereafter prior to receiving information at the Airport, that a travel ban had been imposed.

“On 2nd September 2026, while travelling overseas for business on a pre-arranged itinerary, Mr. Jamaldeen was informed at immigration of a travel ban imposed on 24th August 2026, following which he was arrested by the CCD. A bail application is expected to be made when Mr. Jamaldeen is produced before the Magistrate’s Court of Maligakanda today, 3rd September 2026.”

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