Chairman of the Committee on Public Finance (COPF) and Member of Parliament, Dr. Harsha de Silva, has rejected recent claims accusing him of curtailing e-commerce in Sri Lanka, stating that such allegations are “baseless and misleading.”
In a statement released today, Dr. de Silva clarified that the real issue is the government’s failure to establish a proper legal framework for e-commerce taxation. He revealed that during a COPF inquiry held on June 3, 2025, it was found that Sri Lanka Customs had been using an informal weight-based tax system for e-commerce imports for years without any legal backing.
“This loophole allowed platforms like Temu to flood our market with untaxed bulk imports, undercutting local SMEs and taking undue advantage of the system,” he said.
Dr. de Silva further explained that after these issues came to light in April, Customs hastily shifted back to HS code-based taxation. However, due to the lack of a structured framework, consumers are now facing exorbitant charges. “A 500 rupee item can end up costing 37,000 rupees in taxes and fees,” he said, calling the situation “absurd and inefficient.”
He emphasised that he is advocating for a dedicated and simplified HS code system for business-to-consumer (B2C) e-commerce and vendor-collected taxes, similar to systems in the European Union and Vietnam. “E-commerce should empower consumers and entrepreneurs, not penalise them,” Dr. de Silva stressed.
He concluded by urging stakeholders to support a fair tax system that ensures affordable online shopping, protects local SMEs, and strengthens Sri Lanka’s economy.
