In response to the recent criticism regarding the imposition of a 15% tax on service exports, Deputy Minister of Economic Development, Prof. Anil Jayantha Fernando, has issued a detailed clarification.
Speaking in a special statement, Prof. Fernando outlined the tax structure for digital service export providers, highlighting key differences compared to ordinary citizens. While Sri Lankans are subject to a maximum income tax of 36%, digital service export providers will be taxed at a maximum rate of 15%.
The deputy minister further elaborated that digital service providers will benefit from exemptions on income up to Rs. 150,000. For earnings between Rs. 150,001 and Rs. 235,000, a reduced tax rate of 6% will apply. Any income exceeding Rs. 235,000 will then be taxed at the maximum rate of 15%.
In addition, Prof. Fernando clarified that no tax would be levied on digital service export providers if they had already been taxed at a rate of 15% or more in the foreign country. However, for those taxed at a lower rate, only the balance up to 15% will be charged in Sri Lanka, in accordance with the country’s double tax relief policy.
This move aims to alleviate concerns while ensuring that digital service export providers are taxed fairly in line with international standards.
