🇱🇰 Govt Rejects Port City Tax Term Changes Amid Investor Backlash 🏢

• The Dispute: A public disagreement erupted on LinkedIn between Deputy Minister Chathuranga Abeysinghe and tech entrepreneur Shavini Fernando over shifting tax rules for ICT/BPM and tech companies at the Colombo Port City SEZ. • Investor Grievance: Investors allege tax rates shifted from an initial 3-year zero-tax offer to 15% for employees and 7% for corporates, and recently to the mainland corporate/income tax rate of 36%, driving some to consider relocating to regions like Dubai. • Government Stance: Deputy Minister Abeysinghe stated the revised law aligns all individual taxation under the Inland Revenue Act, leaving "no arbitrage between Port City and main land." He acknowledged confusion regarding foreign income taxation for Port City Approved Persons and noted clarification will be provided. • Core Classification Issue: Tax discrepancies stem from income treatment; foreign currency income deposited into Sri Lankan accounts receives a 15% rate, whereas income classified as local attracts the 36% rate. • Competitiveness Risk: Legal and corporate professionals warn that shifting tax policies weaken Port City’s value proposition compared to competing regional financial hubs like the Dubai International Financial Centre (DIFC).