The government of Sri Lanka is implementing a wave of tax reforms including a rise in VAT from 8% to 12% and an increase in the Telecommunication Levy from 11.25% to 15%. In a statement, the office of the Prime Minister and Minister of Finance, Ranil Wickremesinghe, has directed the Telecommunications Regulatory Commission of Sri Lanka (TRCSL) to implement the latter, with immediate effect. The Telecommunication Levy was reduced from 15% to 11.25% effective from 1 December 2019 which the government claims ‘led to a decrease in revenue by 28% to LKR13.1 billion in 2020 from LKR18.3 billion in 2019. Hence, it is proposed to increase the Telecommunication Levy from 11.25% to 15% with immediate effect.’
Wider income tax reforms have also been proposed, along with changes to betting and gaming levies. The PM’s statement noted that the low tax regime introduced in late 2019 following the election of President Gotabaya Rajapaksa, but reportedly caused an annual loss of around LKR600 billion–LKR800 billion in tax revenue to state coffers.