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Income Tax, Professionals and Migration

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3 years ago

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by Naomal Goonewardena

I am a lawyer by profession who also happens to have an interest in the subject of tax. My tax liability and income tax payments for the year of assessment 2023/2024 would be more than 300% of that in 2021/2022. Not great by any means.

I have been watching in silence the continuous agitation by professionals in particular with regard to the Inland Revenue (Amendment) Act No.45 of 2022 (“2022 Amendment”) and the additional tax which is payable thereunder by individuals. Almost all of the arguments against the increased tax is accompanied by an implied threat that the high tax rates would accelerate the rate of migration of professionals from the country and the dire consequences which would arise therefrom.

It would be pertinent to analyze the marginal tax rates which have been applicable for individuals from the year 2000 to present and the level of income at which the highest marginal rate would have become applicable. The last column set out above is indicative of the level of income which a person should have on a monthly basis after which he would be liable to pay income tax at the maximum rate specified in the table.

The aforesaid table is clearly indicative that for the period 2000 -2010 the marginal rates of tax were relatively high and therefore, largely comparable to what is going to apply from 2023 onwards. The real problem seems to be that from 2011 onwards, the rate of tax for professionals in particular has fallen down dramatically (other than for 2018/2019) with the result that professionals for all intents and purposes have “forgotten” to pay tax.

The enhanced threshold at which the maximum tax was applicable even at the lower rate increased dramatically from 2020 – 2022 and that seems to be the starting point for any entitlements which are now being spoken of. For example, during this period a person with an income of Rs. 500,000 per month would have only paid about Rs. 10,000 per month as income tax (i.e 2% of income). This is clearly unacceptable. The aforesaid table is clearly indicative that society in general has borne the brunt of this for the benefit of professionals at large very specially between 2011-2017. In my view there is absolutely no justification for professionals to be given any tax concessions which are not available to the other tax paying persons in this country.

I am well aware that in view of inflation in particular, affordability of the tax is in question. The personal reliefs and the level at which the maximum marginal tax rate would apply are also debatable. The real question is as to whether a person having an income of approximately Rs. 300,000 per month should or should not be contributing tax at the rate of 36% on his excess income in the context of large segments of our society being unable to eke out a bare existence for their very survival.

It is easy to say that a large part of government revenue is either wasted or subject to corrupt practices. However, the reality seems to be that major part of government revenue goes towards debt service (i.e interest expenses on borrowing) for which we are all responsible, government salaries and pensions. It is also ironic that persons who are the beneficiaries of these expenses or who have failed miserably in their basic obligation to ensure price stability are also among those who are agitating for a reduction in revenue by way of reduced tax.

It is a fallacy for employees who are subject to Pay-As-You-Earn (PAYE) tax to think that in view of the automatic deduction that they are subject to more tax than others or that other individuals in society who are liable to tax do not pay their tax. The latter pay their tax through the quarterly payment mechanism under the Inland Revenue Act of No.24 of 2017 (“IRA”). The often quoted reason for being reluctant to pay tax is that large parts of society are evading tax and therefore, one should not pay taxes. This in my view is too simple a presumption and it is for any person who says that there are other tax evaders to take the necessary steps to report them specifically to the authorities in a manner that they could share the tax burden of all. However, based on my professional training, pointing to other tax evaders and providing that as a justification for not paying your own taxes is an argument unworthy of a professional.

With regard to migration, the following table illustrates the marginal tax rates for individuals in the countries which are often mentioned as being attractive for migration by professionals.

Subject to any differences arising from permissibility of expenses in computing the taxable income, it is clear that any migrant would walk into higher taxes. The migrant would not dare to evade tax in those countries either since the migrant will be summarily thrown out or put behind bars. If a professional wishes to migrate, please do so but do not cite excessive tax in your home country or insufficiency of personal reliefs in computing your taxable income, since any reasonable man in those countries would think that such arguments are hollow to say the least.

We are a Highly Indebted Poor Country (HIPC) and each of us must understand the implications of this. Whichever political party is in power, the government needs revenue. We have exercised our franchise and elected idiots in the past. In 2015 we voted for public sector salary increases which were totally unrealistic which drained the public coffers. In 2019, we the professionals voted for tax cuts, pocketed the additional monies and deprived the State of its due share of revenue. It is now pay-back time for the professionals. In the short term, the increased tax rates should be bearable and in the medium and long term will become palatable.

Increased government revenue is a necessity with current VAT rate of 15% and the marginal income tax rates for individuals and corporates of 36% and 30% being reasonable in a global sense. If any politicians seek your vote or mine on the basis of reducing these tax rates in the absence of alternative concrete revenue generating proposals, let us classify them appropriately as mentioned above and treat them with the contempt which they deserve.


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Pelwatte Dairy commissions Sri Lanka’s largest dairy effluent treatment plant to advance ESG leadership and global market readiness

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2 hours ago

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2026/06/18

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Akmal Wickramanayake, Managing Director of Pelwatte Dairy Industries Limited, unveils the commemorative plaque to officially inaugurate the company’s Effluent Treatment Plant (ETP) at its Buttala manufacturing facility, reaffirming Pelwatte Dairy’s commitment to environmental stewardship, ESG compliance, and sustainable dairy processing.

Pelwatte Dairy Industries Limited has successfully commissioned its state-of-the-art Effluent Treatment Plant (ETP) at its Buttala manufacturing facility, marking a significant milestone in the company’s journey toward environmental stewardship, ESG compliance, and responsible dairy processing.

This facility is the largest Effluent Treatment Plant within a dairy processing operation in Sri Lanka, underscoring Pelwatte Dairy’s commitment to aligning its operations with global environmental standards and strengthening its position in international markets.

Strategic Commitment to ESG and Responsible Growth

This investment reflects a deliberate and forward-looking strategy by the Board of Directors to embed Environmental, Social, and Governance (ESG) principles into core operations. As Pelwatte Dairy continues to scale its processing capacity and expand its export footprint, environmental compliance has become a central pillar of sustainable growth.

The ETP has been designed to meet the increasingly stringent environmental expectations of Western, European, and Far Eastern markets, where compliance with wastewater discharge standards, environmental reporting, and sustainability practices are essential for market access.

Future-Proofed Design for Scalable Growth

The facility has a base treatment capacity of 250 m³ per day, with the engineered capability to handle peak volumes of up to 325 m³, representing approximately 30% additional capacity to accommodate future growth in processing volumes. [ETP Opening | Word]

This future-ready design ensures that Pelwatte Dairy can maintain consistent environmental performance even under high production scenarios, reinforcing the company’s commitment to long-term compliance, operational resilience, and responsible expansion.

Advanced Technology Supporting Global Compliance

The ETP integrates advanced treatment technologies, including:

Integrated Dissolved Air Flotation (IDAF)

Anaerobic and Enhanced Sequential Batch Reactor (AnSBR/eSBR) systems

Dedicated CIP wastewater management

Real-time automated process monitoring

Screw press sludge dewatering

These systems ensure high treatment efficiency and compliance with critical environmental parameters such as Biological Oxygen Demand (BOD), Chemical Oxygen Demand (COD), and nutrient discharge limits.

The plant is fully aligned with Sri Lanka’s stringent Central Environmental Authority (CEA) discharge standards and supports adherence to ISO 14001 Environmental Management System (EMS) practices, reinforcing Pelwatte Dairy’s structured approach to environmental management and continuous improvement.

Regulatory Engagement and Endorsement

The inauguration ceremony was attended by distinguished representatives from the Board of Investment (BOI) Environmental Division and Central Environmental Authority (CEA) provincial and district offices, reflecting strong regulatory engagement and endorsement of the environmental standards achieved through this investment.

Their presence underscores Pelwatte Dairy’s proactive approach in working closely with regulatory authorities to ensure compliance with national environmental frameworks while aligning with global best practices.

Enhancing Global Credibility of Sri Lankan Dairy

With this development, Pelwatte Dairy strengthens its position as a responsible and globally competitive dairy processor, capable of meeting the environmental expectations of leading international buyers and regulatory bodies.

This initiative not only enhances the company’s ESG profile but also contributes to elevating the sustainability standards of Sri Lanka’s dairy industry.

Acknowledgements

Pelwatte Dairy extends its sincere appreciation to its project team, operational staff, consultants, regulatory authorities, and partners for their contributions. Special recognition is extended to Industrial Solutions Lanka (Pvt) Limited for their engineering expertise and successful project delivery.

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Port City Colombo Forum in Dubai positions Sri Lanka as South Asia’s gateway for UAE business expansion

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2 hours ago

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2026/06/18

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Prof. Arusha Cooray, Ambassador of Sri Lanka to the United Arab Emirates

Exclusive invitation-only engagement at the Ritz-Carlton DIFC brought together approximately 200 senior UAE business and diplomatic leaders to explore Sri Lanka’s role as a platform for regional growth

The Embassy of Sri Lanka in the United Arab Emirates and the Consulate General of Sri Lanka in Dubai and the Northern Emirates, in collaboration with Colombo Port City Economic Commission and CHEC Port City Colombo Pvt. Ltd., hosted Globalisation and the Sri Lankan Opportunity – From Recovery to Relevance: Sri Lanka’s Moment in the Evolving Global and Regional Economy, an invitation-only diplomatic and investment engagement at The Ritz-Carlton, Dubai International Financial Centre.

The forum brought together approximately 200 senior leaders from across UAE corporates and business chambers alongside Sri Lanka’s most senior diplomatic and investment representatives – among them senior executives from Sobha Realty, Binghatti, Oracle, Emirates Airlines, First Abu Dhabi Bank, JLL, Cushman & Wakefield, CBRE, IFS, Danube and Samana Developers – reflecting the depth of interest from the UAE’s leading industries in Sri Lanka’s evolving economic proposition.

Opening the forum, Prof. Arusha Cooray, Ambassador of Sri Lanka to the United Arab Emirates, set the tone for a morning of substantive dialogue, speaking to the depth and durability of the UAE–Sri Lanka partnership, one built on decades of trade, people, and shared economic ambition, and affirming Sri Lanka’s commitment to taking that relationship into a new chapter defined by what Sri Lanka can offer UAE businesses seeking to grow their presence across South Asia.

The keynote address was delivered by Ghanim Al Falasi, CEO of Falak Tayyeb Platinum and Senior Vice President/Director General’s Office for of Dubai Silicon Oasis (DSO), who drew on over a decade of senior leadership experience in the UAE’s innovation and technology ecosystem to frame the question of what South Asia’s emerging platforms offer to forward-looking UAE businesses. He noted that while Dubai provides global access to capital and logistics, Colombo offers strategic access to South Asia, and that together the two cities can function as complementary platforms serving different but mutually reinforcing roles in the regional economy.

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The Ceylon Chamber of Commerce to hold 187th AGM

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2 hours ago

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2026/06/18

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The Ceylon Chamber of Commerce will convene its 187th Annual General Meeting on Thursday, 25th June 2026, at 5.30 PM at The Forum, Cinnamon Life.

This year’s gathering welcomes His Excellency Andrew Patrick, High Commissioner of the United Kingdom to Sri Lanka, as Chief Guest, who will deliver the keynote address. His presence reflects the close and longstanding ties between Sri Lanka and the United Kingdom, and is especially fitting at a juncture when strengthening trade ties, investor confidence, and sustained economic reform remain front of mind for the nation’s business community.

Chairperson of the Ceylon Chamber, Krishan Balendra, will also address the audience, reflecting on a year of progress and setting out the priorities ahead. His remarks will provide an overview of the Ceylon Chamber’s continued push to sharpen private sector competitiveness, drive evidence-based policy advocacy, and anchor long-term economic stability.

Following the formal proceedings, members and guests are invited to a networking reception.

Ceylon Chamber members wishing to attend may register by contacting Alikie at alikie@chamber.lk / 9411 558 8805.

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