By Minister Namal Rajapaksa
Since the start of the COVID-19 in 2019, people’s movement has been restricted and as a result e-commerce platforms and the digital economy started making a new and vigorous rise.
In both these areas, Sri Lanka had been lacking ground as these sectors were quite untapped with tremendous potential which lied ahead. It is not that Sri Lanka did not have the expertise to expand these areas, it’s just that the previous government had not given much consideration or way to it, despite several countries going ahead in digitalization.
Today, there are rumors floating that the government has increased taxes for e-commerce platforms by taxing online transactions. This is false. Infact the government is reiterating its position that it will make way for e-commerce platforms and digitalization to make their mark in Sri Lanka and will offer all assistance and facilities possible. In recent discussions with Minister of Finance Basil Rajapaksa, I discussed the tremendous need for more businesses to go digital and to create more online platforms, especially since globally all countries are now adjusting to the post COVID world.
Hon. Rajapaksa agreed and discussions are underway to expand these industries so that more entrepreneurs can surface and more people can get their businesses rolling even while having limited people’s movement.
A lot of people have queried from me as to why a buffer rate of 6.5% to 7% is being charged by banks for online transactions as opposed to the previous surcharge of 2%. This is not a government policy and is in fact being charged by the private banks. The government has nothing to do with it. Rising complaints are being received that these taxes are for services such as e-bay, Netflix etc, especially at a time when people’s incomes have been affected. These concerns were also raised with Minister Basil Rajapaksa who then instructed State Minister Ajith Nivard Cabraal to see how this matter can be solved for the benefit of the consumer. Minister Cabraal is in discussions with the private banks who have explained that this is due to the fluctuating dollar rate since these transactions are with platforms overseas. However Minister Cabraal is trying to reach a settlement on the matter soon.
The government will not be taxing online platforms, e-commerce platforms or digital businesses anytime soon and in fact relief will be offered in the next Budget, prepared by the Finance Minister. Minister Basil Rajapaksa has assured me that he will make way for the rise of more such platforms.
I am also in discussion with Minister Basil Rajapaksa to further relax taxes for e-businesses with a foreign currency inflow into the country. Such as e-gaming which attracts massive remittances and has become a global market attracting the young and old alike. Many have established livelihoods out of this and my aim is to expand e-gaming in Sri Lanka which will attract valuable foreign exchange. Presently for inward remittances from e-gaming, the Central Bank has imposed taxation on it but I am in discussions to see how this can be solved where we can promote the industry further.
Further, I am also in discussions to see how the government can promote BlockChain which enables the existence of cryptocurrency and a larger digital economy and I am on the verge of drafting a cabinet paper with the Finance Minister’s advice to get the approval of the government to pave way for digital banking. Through this approval, I am also looking to appoint a committee that can create policies for blockchain and crypto and train the youth to support industries related to blockchain.
Going forward Sri Lanka needs to concentrate more and use its potentials to create e-commerce platforms that can go global as well as expand our digital economy. This industry can attract massive foreign exchange and also create large-scale employment. I look forward to hearing fresh, new ideas from all of you as well on how we could strengthen these sectors which will only benefit us in this new normal world.
Till then stay safe and stay indoors.