Minister of Labour and Deputy Minister of Economic Development, Prof. Anil Jayantha Fernando, has addressed concerns over taxation on individuals earning foreign revenue through digital services, stressing that recent amendments to the Inland Revenue Act have been misinterpreted.
Prof. Fernando clarified that all income earned within Sri Lanka, whether domestic or international, is subject to taxation. However, he emphasized 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. In reality, under the Income Tax Act, everyone is subject to income tax. However, starting in April, individuals earning less than Rs. 150,000 per month will be fully exempt, regardless of their industry,” he explained.
For those earning above this threshold, a progressive tax system applies. For example:
- 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 is taxed at 6%, amounting to Rs. 3,000.
Prof. Fernando also highlighted that while regular taxpayers face income tax rates of up to 36%, those in the digital services sector are subject to a maximum tax rate of 15%, providing a relative advantage rather than an additional burden.
He urged the public to avoid misinformation, stating that the revised tax structure is a step toward a more balanced and fair taxation system.
