🇱🇰 Rising Tax Burden Triggers Brain Drain & Capital Capitalization

• Personal Income Taxation: Current rates reach up to 36% above the Rs. 1,800,000 tax-free threshold (e.g., Rs. 420,000 tax on Rs. 2,500,000 annual income), placing severe financial pressure on lower- and middle-income earners. • Disparity in Interest Taxes: Resident citizens face interest income tax up to 36%, compared to a concessionary 10% final tax rate for non-resident Sri Lankan citizens on local Rupee deposits. • Capital Flight Loophole: High-value resident deposit holders are reportedly transferring funds to non-resident relatives to exploit the 10% rate, eroding domestic tax equity. • Impact on Key Sectors: Heavy tax pressure is fueling a major brain drain among skilled professionals, critically impacting healthcare, ICT/BPM, education, tourism, construction, and the financial sector, leading to reliance on foreign talent.