Business

Govt. urged to bring foreign digital companies operating in Sri Lanka under a local regulatory system

Published

4 years ago

2022/06/13

Thilina Walpola

International digital companies in Sri Lanka are exempt from paying taxes
They take millions of dollars out of the country every year
Local enterprises that offer same services subject to taxes
Central Bank of Sri Lanka is aware of this inequality
Levying from non-domiciled businesses no longer a choice but a necessity
Indian policymakers have won this battle and so can we

by Sanath Nanayakkare

FITIS, the voice of Sri Lankan Information and Communication Technologies industries urges the government to bring foreign digital companies operating in Sri Lanka, under a local regulatory system where they are liable for taxes and other regulations like their local counterparts.

“Apart from the lack of fairplay for local companies, these foreign digital operators take millions of dollars out of the country every year. In a situation where Sri Lanka is strapped for dollars to buy essentials like medicine, fuel and food and banks are unable to issue dollars to students sitting for foreign exams can we any longer afford this foreign exchange outflow for locally consumed services?,” FITIS asks.

The Digital Chapter of the Federation of Information Technology Industry Sri Lanka (FITIS) states that the recent imposition of taxes by the government is understandable in the current circumstances, at this critical point of nation building. However, there are other factors that need to be looked at and changed if we are to progress with the digital economy connected to digital platforms, they say.Channa de Silva, President of the FITIS Digital Chapter says, “Digitalisation is a way forward that can rationalise all our economic activities as well as being a leveller that democratises opportunity. However, if we don’t treat every player in the field the same way, it can create inequality, monopolies and result in heavy losses to the economy.”

The following are some comments made by Channa de Silva.

“A viable and healthy ecosystem for startups and entrepreneurs to exist requires rules and regulations that ensure fairplay, especially when they compete with global giants who enter local markets. Therefore, a level playing field for everyone is an urgent need in this particular sector, and one way to ensure that is to bring foreign digital companies operating in our markets under a local regulatory system where they are liable for taxes and other regulations. For example, well known foreign digital operators handling ride-sharing and transport of goods in Sri Lanka, use our road networks, fuel subsidies and state infrastructure to further their businesses, yet they have an unfair advantage over their tax paying local counterparts.”

“Foreign players have enjoyed this tax free haven for many years, which is a good case study of a lack of fairplay for equivalent local operators in the industry. These operators, by refusing to register as local entities, do not follow any of the laws of Sri Lanka and avoid paying local taxes. They are operating under the misapprehension of not being liable to pay taxes in areas they operate, outside their country of origin. However, this is a stand that has been challenged by countries like India who have won the battle to be treated on an equal footing.”

“The fact that India has been fighting the issue of taxing foreign digital services for a long time is well documented in the media. They were the first to introduce a digital tax called the ‘Equalisation Levy,’ back in 2016, which was payable by Indian residents for online advertisement services purchased from non-resident companies. Later, the Equalisation Levy was extended to include a 2% levy on all online sale of goods or services into India by non-resident e-commerce operators.”

“The Reserve Bank of India (RBI) had ordered foreign payment companies to locally store data on all transactions taking place within India from October 15, 2018. Thus, global payment companies need to pay around 15% tax on their income from India, as they set up servers locally to comply with the RBI directive on data storage. The central government of India went further, by bringing a 2% digital service tax levy on all trade and services of foreign e-commerce companies through their Finance Bill of 2020-21. With that even companies like Amazon, Walmart-owned Flipkart and others having an annual turnover of ₹2 crore or more operating in India became liable for tax. The expanded equalisation levy became applicable from April 2021 to a range of digital services, including non-resident e-commerce operators involved in the online sale of goods and provision of services.”

“The G20 summit and the Organisation for Economic Co-operation and Development meeting held in October 2021, made a new foray into global taxation rules. Accordingly, a decision was made to ensure that foreign multinational firms will pay a minimum 15% of their total revenue in countries they operate in, which means companies like Microsoft, Google, Amazon, etc, would pay a tax of 15% for their operations in India.”

“Subsequent to this, India and the US agreed that the Equalisation Levy currently in existence for US based companies, will count as a credit against future taxes. The credits will be accounted for from April 1, 2022, until either March 31, 2024, or whenever the global taxes law comes into force. In the meantime, India continues to levy the 2% equalisation tax as credits.”

FITIS is of the view that it is more than time for Sri Lanka to take a leaf from India’s regulatory policy book. Channa de Silva says, “It is vital for a country like ours, which is almost exclusively reliant on foreign investment in order to progress, to recognize the importance and impact of the economic bolster provided by local companies. A right step in this direction would be to concede that as of now, there is no level playing field between International digital companies and local companies, businesses and startups. International digital players in Sri Lanka are exempt from paying taxes, whereas local enterprises that offer the same services are subject to taxes — more than before in the current economic crisis.”

“The Central Bank of Sri Lanka, was aware of the inequality because they highlighted it in their 2019 report that says ‘gig platforms, which are operating worldwide despite being based in a particular country, are difficult to be controlled by the host country’s regulatory environment and taxation system in the absence of local business registration. In contrast, local platforms are under regulatory scrutiny and are liable for local taxes. Such differences in the applicability of regulation will not ensure a level playing field for local operators.”

“Taking steps to bring in regulations to tax non-domiciled businesses is no longer a choice but a necessity. Apart from guaranteeing a level playing field and equal opportunity for local digital players, this will save us much needed dollars that are necessary to sustain the people of this country,” Channa de Silva says.

All News Advertisement

Business

Redefining Industry Standards: Home Lands Group Emerges as Sri Lanka’s Premier Force in Lifestyle and Developer Leadership

Published

21 hours ago

2026/01/19

Thilina Walpola

At a time when Sri Lanka’s property landscape is experiencing rapid transformation, one organisation continues to define the direction of the market through scale, innovation, and an unwavering commitment to quality. At the 2025 PropertyGuru Asia Property Awards (Sri Lanka), the Home Lands Group of Companies maintained its place at the peak of the industry, acquiring two of the most influential awards of the year: Best Developer for the Group and Best Lifestyle Developer for Home Lands Skyline (Private) Limited.

These distinctions signify more than just project-level success. They reflect the organisation’s leadership in shaping how Sri Lankans aspire to live, work, and invest.

The Home Lands Group has built a broad presence throughout Sri Lanka’s most active corridors, from the rapidly evolving suburbs of Colombo to the developing lifestyle hubs of Negombo, Malabe, and Kahathuduwa, guided by extensive market research. The Group has transformed its in-depth knowledge of the property market into a portfolio of assets embodying superior residential living experiences, supported by strategically located branches that deliver an integrated suite of real estate services for buyers nationwide.

Home Lands Skyline, the Group’s flagship development arm and the 2025 Best Lifestyle Developer, is responsible for this on-ground reach. The company was commended for shaping communities through visionary residential environments and for its ability to combine cutting-edge sustainability with expansive lifestyle amenities. With 19 completed projects, including the largest integrated golf community in Sri Lanka and nine sustainable developments, Home Lands Skyline keeps raising the bar for efficiency, design, and placemaking.

Both ambition and operational strength are evident in its recent accomplishments. The company completed a number of landmark projects such as Elixia 3C’s Apartments, Santorini Resort Apartments & Residencies, and the 1,200-unit Canterbury Golf Resort Apartments & Residencies, which has more than 50 resort amenities that meet international standards and the nation’s first day-and-night golf course. In addition, the Group’s remarkable 58% market share earned it the title of Sri Lanka’s Most Preferred Residential Real Estate Brand in the RIU Brand Health Survey.

This growth is supported by a sustainability-first philosophy. The company incorporates environmental responsibility into every stage of development, from modular construction, renewable energy integration, and ethical sourcing throughout its supply chain to passive design principles that improve natural light and ventilation. This dedication is demonstrated by its Platinum Award at the CIOB Green Awards 2024.

The Home Lands Group is at the forefront of creating new lifestyle expectations as demand for well-planned, resort-style communities rises. In addition to confirming past achievements, the Group’s 2025 victories at the PropertyGuru Asia Property Awards (Sri Lanka) indicate a trajectory of ongoing leadership, positioning it as a transformative force in the future of Sri Lankan real estate.

Business

Cheaper credit expected to drive Sri Lanka’s business landscape in 2026

Published

21 hours ago

2026/01/19

Thilina Walpola

The Central Bank has reported data points that help stimulate private sector investment in 2026.

The opening weeks of 2026 are offering a glimmer of cautious hope for the business community weary from years of economic turbulence and steep financing costs. The Central Bank’s latest weekly economic indicators signal more than just macroeconomic stability. They point to early signs of a long-awaited trend; a measurable dip in borrowing costs.

“If sustained, this shift could transform steady growth into a robust, investment-led expansion,” a senior economist told The Island Financial Review.

The benchmark Average Weighted Prime Lending Rate (AWPR) declined by 21 basis points to 8.98% for the week ending 16 January, according to the Central Bank.

“For entrepreneurs and CEOs, this is not just another statistic. It could mean the difference between postponing an expansion and hiring new staff. Across boardrooms, the hope is that this marks the start of a sustained downward trend that holds through 2026,” he said.

When asked about the instances where Treasury Bills are not fully subscribed by the investors, he replied,” Treasury Bill yields remained broadly stable, with only minimal movement across 91-day, 182-day, and 364-day tenors. Strong demand was clear, with the latest T-Bill auction oversubscribed by about 3.5 times. This sovereign-level stability creates room for the gradual easing of commercial lending rates, allowing the Central Bank to nurture a more growth-supportive monetary policy.”

Replying to a question on how he views the inflation numbers in this context, he said, “The year-on-year increase in the National Consumer Price Index stood at a manageable 2.4% in November, with core inflation at 2.2%. Such an environment should allow interest rates to fall without sparking a price spiral. For businesses, it means the real cost of borrowing adjusted for inflation, and it is becoming more favourable for them. While consumers still face weekly price shifts in vegetables and fish, the broader disinflation trend gives policymakers leeway to keep credit affordable.”

Referring to the growth trajectory, he mentioned, “With GDP growth provisionally at 5.4% in the third quarter of 2025 and Purchasing Managers’ Indices signalling expansion in both manufacturing and services, the economy is in a growth phase. However, to accelerate this momentum businesses need capital at lower cost to modernise machinery, boost export capacity, and spur innovation. Affordable credit is, therefore, not merely helpful, it is essential to shift growth into a higher gear.”

In conclusion , he said,” The coming months will be watched closely, because for Sri Lankan businesses, a sustained decline in borrowing costs isn’t just an indicator; it’s the foundation for growth. There’s hope that this easing in the cost of money will prevail through most of the year.”

By Sanath Nanayakkare ✍️

Business

Mercantile Investments expands to 90 branches, backed by strong growth

Published

21 hours ago

2026/01/19

Thilina Walpola

Mercantile Investments & Finance PLC has expanded its national footprint to 90 branches with a new opening in Tangalle, reinforcing its commitment to community accessibility. The trusted non-bank financial institution, with over 60 years of service, now supports diverse communities across Sri Lanka with leasing, deposits, gold loans, and tailored lending.

This physical expansion aligns with significant financial growth. The company recently surpassed an LKR 100 billion asset base, with its lending portfolio doubling to Rs. 75 billion and deposits growing to Rs. 51 billion, reflecting strong customer trust. It maintains a low NPL ratio of 4.65%.

Chief Operating Officer Laksanda Gunawardena stated the branch network is vital for building trust, complemented by ongoing digital investments. Managing Director Gerard Ondaatjie linked the growth to six decades of safeguarding depositor interests.

With strategic plans extending to 2027, Mercantile Investments aims to convert its scale into sustained competitive advantage, supporting both customers and Sri Lanka’s economic progress.