By Sanath Nanayakkare

The government of Sri Lanka is navigating a precarious fiscal tightrope as it has proposed a new tax targeting individuals earning foreign revenue through digital services, a move aimed at bolstering state coffers but risking alienation of a key voter base.

With the International Monetary Fund (IMF) urging reforms to meet a critical revenue-to-GDP ratio, the government has unveiled a tax proposal set to take effect from April 1, 2025. However, the plan has sparked fierce backlash from digital professionals, including freelancers, IT consultants, and remote workers, who warn that the levy could drive an exodus of talent to countries with more favorable tax regimes.

Amid ongoing discussions on the topic, Dr. Harsha Subasinghe, Chairman-CEO of CodeGen and Member of the Port City Commission, expressed concern during a Hiru TV interview yesterday about Sri Lanka’s abrupt hike in digital service tax from 0% to 15%. He warned that this move risks destabilizing the tech industry and driving professionals abroad.

“These professionals are vital to our economy, generating foreign exchange through hard work, strategic marketing, and established global business ties,” he emphasized.

When questioned on why he had not raised the issue directly with the President, Dr. Subasinghe noted, “The Finance Ministry is hyper-focused on meeting IMF conditions to secure scheduled tranches. But what happens if our top USD earners depart? Today’s IT worker here could be in Singapore tomorrow. Many firms have already relocated overseas, and past waves of emigration saw one million professionals leave. This tax could trigger another exodus—there’s little incentive to stay.”

Highlighting broader opportunities, he pointed to AI’s projected USD 2 trillion contribution to the world economy by 2030.

“If Sri Lanka captures 1% of that, we will be able to earn USD 20 billion. But to do that, we need IT talent here. Instead, policies like this risk driving them away,” he said.

However, Professor Anil Jayantha Fernando at a press conference last month emphasised that this particular tax has been misinterpreted, leading to misconceptions in society.

He clarified that the taxation system applies to all income earned within Sri Lanka, whether the source is domestic or international. However, he highlighted that relief measures have been introduced for those earning from digital services compared to other sectors.

“There has been debate about a 15% tax on service exports, with some believing it is an entirely new tax. Under the Income Tax Act, everyone is subject to income tax. However, individuals earning less than Rs. 150,000 per month will be fully exempt from income tax starting in April, regardless of their industry,” he explained.

Speaking further he said:

“If an individual earns Rs. 200,000 per month from providing digital services abroad, the first Rs. 150,000 is tax-free. The remaining Rs. 50,000 falls within the Rs. 85,000 tax bracket, taxed at 6%, amounting to just Rs. 3,000. While other entities face income tax rates of up to 36%, those in the digital services sector are capped at a maximum of 15%. This provides a relative advantage rather than imposing an additional burden. So, the new tax structure is not an unfair imposition but rather a step toward a more balanced taxation system.”

The Sustainable Development Council (SDC), together with the International Organization for Migration (IOM) Sri Lanka, recently presented the National Framework to Measure the Progress and Contribution of Migration towards achieving the Sustainable Development Goals (SDGs) to Minister of Foreign Affairs, Foreign Employment & Tourism, Vijitha Herath at the Ministry premises. The National Framework was presented jointly by the Director General of SDC, Chamindry Saparamadu and the Chief of Mission of IOM Sri Lanka, Kristin Parco in the presence of senior officials from SDC, IOM and the Ministry of Foreign Affairs.

The relationship between migration and development is a complex one. Migration can generate several economic benefits, labor force contributions; bring new skills and knowledge to destination countries fostering development. At the same time, migration can entail negative consequences through brain drain and increased vulnerabilities. The out-migration of highly skilled workers from developing countries can result in loss of essential human capital from these countries while poor integration of migrants can lead to social tensions and discrimination in receiving countries. In the case of irregular migration situations, migrant workers remain vulnerable to exploitation and human trafficking.

Until recently, there was no global framework to harness migration’s potential for development. The 2030 Agenda for Sustainable Development and its Sustainable Development Goals (SDGs) provided the first global framework recognizing migration’s role in development. Migration intersects with several key SDGs and shapes both challenges and opportunities for development. By addressing both the opportunities and challenges associated with migration, countries can enhance their ability to meet key SDG targets and promote social and economic inclusion. Additionally, the Global Compact for Safe, Orderly and Regular Migration (GCM), endorsed in 2018, is a non-binding agreement focusing on international cooperation on migration. It reinforces the SDGs’ recognition of migration’s development impact.

A critical enabler for achieving both SDG and GCM outcomes are reliable and accurate migration data which would help identify gaps and opportunities for evidence-based policy and programmatic interventions to ensure that migration is effectively integrated into national development strategies. By monitoring migration patterns, economic contributions, and social impacts, countries can promote inclusive growth, protect migrant rights, and address challenges, ensuring that migration contributes positively to sustainable development while leaving no one behind.

The National Framework provides a sustainable mechanism for tracking and monitoring Sri Lanka’s progress towards achieving the migration-related targets of the SDGs. It maps existing national migration data, identifies data gaps, suggests proxy/national targets and indicators, and provides a comprehensive framework to measure the progress and contribution of migration towards achieving the SDGs in Sri Lanka with a focus on capacity building for custodian agencies, periodic reviews, and the proper dissemination of data and information.

The National Framework was authored by Dr. Bilesha Weeraratne of the Institute of Policy Studies on behalf of SDC and IOM Sri Lanka and was developed with guidance from an Inter-agency Task Force consisting of representatives from relevant government agencies through the project titled ‘Tracking the Progress on Sri Lanka’s Migration-Related Targets of the 2030 Agenda for Sustainable Development and Assessing the Contribution of Migration towards the SDGs’ supported by the IOM Development Fund.

Receiving the National Framework, the Minister of Foreign Affairs Vijitha Herath reiterated Sri Lanka’s commitment to becoming a GCM champion country showcasing the Government’s commitment towards political advocacy and multilateral engagement in advancing GCM in the country.

Commenting on the National Framework, the Director General of SDC, Chamindry Saparamadu said “migration is a powerful tool to achieve sustainable development if properly addressed and integrated into development policies. As such, the importance of monitoring the impact of migration cannot be overemphasized. The National Framework will strengthen Sri Lanka’s ability to measure the progress and contribution of migration towards achieving the SDGs in Sri Lanka’ while the Chief of Mission of IOM Sri Lanka, Kristin Parco said ‘the development of the National Framework was a result of the strong partnership between SDC and IOM reflecting Sri Lanka’s proactive commitment towards enhanced migration governance. Together with Sri Lanka’s interest in joining the GCM Champion Country Initiative, this Framework serves as a catalyst for advancing the SDGs and the GCM, promoting evidence-based policy making and informed reporting on migration and its contribution to sustainable development.’

The National Framework would be the foundation for the development of a migration and SDGs monitoring ICT Platform, the work of which has already commenced.

The Factory Outlet, popularly known as TFO, took to the stage to offer a unique shopping experience for all its shoppers in Welisara. On March 01st , TFO, celebrated a major milestone with the grand opening of its newest outlet in Welisara. The event was a celebration of music and fashion.

‘The grand opening started off with TFO showcasing its latest collections in an exclusive runway fashion show. The collection was a perfect blend of trendy and contemporary styles across all categories, offering a diverse range of choices for men, women, children and accessories for everyone to shop for the festive season of Ramadan and Avurudu! The models on the runway showcased stunning styles featuring flowing dresses, bold colours and unique fashion, perfect for Sri Lanka’s biggest holidays during March and Apri, a press release said.

‘The grand opening at Welisara is perfectly timed to provide the latest trends and festive collections, allowing shoppers to visit TFO Welisara and shop for their friends and family, the release added.