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.

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Business

Sri Lanka educates women but keeps many out of work, ADB warns

Published

22 hours ago

2026/06/5

Thilina Walpola

Shannon Cowlin - ADB Country Director for Sri Lanka

Sri Lanka has one of the most educated female populations in South Asia, yet only about one in three women participates in the labour force, making female workforce participation among the lowest in the region and leaving a significant source of economic growth untapped.

That paradox took centre stage at a knowledge forum organised by the Asian Development Bank (ADB) in Colombo on June 3, where government officials, labour authorities, academics and private-sector leaders examined the deep-rooted barriers preventing women from fully participating in the economy and explored reforms needed to unlock their economic potential.

Opening the event, ADB Country Director for Sri Lanka Shannon Cowlin said the issue extends beyond gender equality and has become a critical economic challenge for a country seeking sustained growth and inclusive development.

“Empowering women to participate fully in the labour force is not only a matter of equality; it is essential for inclusive economic growth and poverty reduction in Sri Lanka,” she said.

The forum, held under ADB’s Serendipity Knowledge Programme (SKOP), focused on findings from a recent ADB-supported study exploring the factors behind Sri Lanka’s persistently low female labour force participation.

Cowlin noted that despite notable progress in education and human development, Sri Lanka continues to lag behind on measures of gender equality and women’s economic participation. She said multiple studies have shown that the factors shaping women’s labour force participation are layered, interconnected and multidimensional.

According to the study, many women remain concentrated in informal, low-paid and insecure employment with limited access to social protection and few opportunities for career advancement. Social and cultural expectations continue to place primary caregiving responsibilities on women, often restricting their ability to pursue careers or remain in full-time employment.

The lack of affordable childcare services, unequal access to digital skills and technology, concerns over workplace safety, sexual harassment and inadequate transport options were identified as major obstacles preventing women from entering or remaining in the workforce.

“These are complex challenges that require action from all stakeholders – government, development partners, the private sector, civil society and academia,” Cowlin said.

She stressed that improving women’s labour force participation would require more than isolated policy interventions, calling instead for structural transformation, stronger infrastructure and care services, progressive workplace practices and broader societal changes that improve women’s mobility, safety and economic agency.

The event featured a presentation by Professor Dileni Gunawardena of the University of Peradeniya, who shared findings from ADB’s study on female labour force participation, followed by a panel discussion involving representatives from the International Labour Organisation, the Department of Labour, MAS Holdings and John Keells Holdings.

Panelists discussed measures to improve the enabling environment for women, including greater investment in the care economy, expanded childcare facilities, enhanced skills development, creating safe, supportive workplaces and career pathways for upward mobility.

Participants agreed that increasing women’s participation in the workforce is not merely ‘a nice to have’ but an economic necessity, particularly as Sri Lanka seeks to accelerate recovery, boost productivity and achieve more inclusive growth.

The ADB said Sri Lanka’s economic recovery presents a unique opportunity to address long-standing structural barriers facing women and to build a more inclusive labour market that fully utilises the country’s human capital.

By Sanath Nanayakkare

Business

ComBank offers exclusive financial solutions to the ‘Guardians of the Skies’

Published

22 hours ago

2026/06/5

Thilina Walpola

Hasrath Munasinghe, Chief Operating Officer of Commercial Bank and Air Vice Marshal Rajinth Jayawardena, Director General Welfare of the SLAF exchange the agreement in the presence of representatives of the two organisations.

Reinforcing its commitment to those who serve the nation, the Commercial Bank of Ceylon has entered into a Memorandum of Understanding with the Sri Lanka Air Force (SLAF) to introduce a comprehensive suite of concessionary financial facilities for its officers and other ranks.

The partnership, unveiled in a year that marks the 75th anniversary of the Air Force, which was founded in March 1951 as the Royal Ceylon Air Force, reflects a shared recognition of the critical role played by the SLAF as the steadfast ‘Guardians of the skies,’ entrusted with safeguarding the country’s security and sovereignty.

Under the terms of the agreement, Commercial Bank will extend a range of specially tailored financial products to SLAF personnel, including personal loans, leasing facilities, housing loans and credit cards. These facilities will be offered at concessionary interest rates, alongside concessions on documentation charges, enabling Air Force personnel to access financial support on more favourable terms.

The Bank said the initiative is part of its continuing efforts to deliver best-in-class lending solutions that are both accessible and responsive to the diverse needs of its customers. By offering attractive and affordable repayment structures, the scheme is designed to empower SLAF officers and other ranks to meet their personal financial requirements with greater ease and flexibility.

A key feature of the programme is the ability for beneficiaries to align repayments with their income patterns, ensuring that the facilities remain practical and sustainable over the long term. This flexibility, combined with preferential pricing, is expected to make a meaningful difference to the financial wellbeing of Air Force personnel and their families.

Business

Treasury Bill rate hike compounds stock market volatility

Published

22 hours ago

2026/06/5

Thilina Walpola

The CSE was extremely volatile yesterday mainly due to external and internal negative factors.

‘The escalation of the war situation in West Asia and the proposed tariff hike on Sri Lanka’s exports to the US by the Trump administration are worsening Sri Lanka’s economic woes. Further, the government’s decision to increase the Treasury Bill rate has also created some uncertainty in the market, stock analysts said.

The All Share Price Index was up by 249.83 points, while the S and P SL20 rose by 67.61 points. Turnover stood at Rs 2.79 billion with 11 crossings.

Companies that mainly contributed to the turnover by way of crossings were: Chevron Lubricants 1.5 million shares crossed to the tune of Rs 294 million and its shares traded at Rs 196, TJ Lanka 2.9 million shares crossed for Rs 90.8 million; its shares traded at Rs 31, Citizens Development Business Finance 2.5 million shares crossed to the tune of Rs 80.2 million; its shares traded at Rs 32.50.

ACL Cables 634,248 shares crossed for Rs 60.9 million; its shares traded at Rs 96, CCS 438,000 shares crossed to the tune of Rs 57.4 million; its shares traded at Rs 131, Overseas Realties 991,500 shares crossed for Rs 49.6 million; its shares traded at Rs 50 and Access Engineering 653,000 shares crossed to the tune of Rs 49.3 million; its shares sold at Rs 75.50.

In the retail market companies that mainly contributed to the turnover were; Dialog Rs 133 million (3.2 million shares traded), Seylan Bank (Non-Voting) Rs 110 million (1.7 million shares traded), Colombo Dockyard Rs 96.8 million (751,548 shares traded), Ceylinco Holdings (Non-Voting) Rs 77.5 million (516,000 shares traded), Sampath Bank Rs 74.2 million (530,000 shares traded), JKH Rs 74 million (3.7 million shares traded) and LMF Rs 65 million (781,000 shares traded). During the day 123 million share volumes changed hands in 26272 transactions.

It is said that the manufacturing sector, especially Chevron Lubricants and several other firms performed well, while the banking and financial sector performed too.

Yesterday the rupee was quoted flat at Rs 334.50/335.50 to the US dollar in the spot market on, unchanged from the previous day’s close, dealers said, while bond yields were broadly steady.

The telegraphic transfer rate for Sri Lanka’s rupee against the US dollar was Rs 330.50 buying, Rs 339.50 selling; euro was Rs 381.1884 selling, Rs 395.1054 buying; and the pound Rs 442.6620 buying Rs 456.7076 selling.

A bond maturing on 01.08.2030 was quoted at 12.12/20 percent, down from 12.15.25 percent.

A bond maturing on 15.06.2034 was quoted at 13.12/20 percent, down from 13.15/25 percent.

A bond maturing on 15.03.2035 was quoted flat at 13.15/25 percent.

By Hiran H Senewiratne