Sri Lanka will impose a 15% tax on foreign income earned by individuals, including freelancers, starting April 1, 2025. This applies to those providing services to overseas clients and bringing earnings into the country through the banking system, according to Sarah Afker, Head of Tax Services at BDO Sri Lanka.
Previously, such incomes were exempt to encourage foreign exchange inflows. However, under the new amendment to the Inland Revenue Act, all foreign-source earnings will be taxed at 15%, removing earlier exemptions. This affects professionals such as IT freelancers and consultants working with international clients.
After deducting expenses, corporations engaged in service exports will continue to be taxed only on profits. Individuals may also attempt to submit income statements and claim expenses to reduce taxable income, Afker suggested.
The move has sparked strong reactions from the freelance community, with many considering shifting their businesses to Dubai or other tax-friendly locations. Critics argue that the tax will discourage Sri Lanka’s youth, who have worked hard to earn foreign income.
This change marks a shift in Sri Lanka’s tax policy, which had previously exempted such earnings, except for a brief period between 2018 and 2019.
Source: EconomyNext
Shame on you Anura.
The tax would have been fine if freelancers got something in return other than empty promises. unlike other employees freelancers don't get
– Guaranteed monthly income
– Paid annual, sick, or maternity leave
– Overtime pay entitlements
– Legal job security
– Employer-sponsored training or upskilling
– Mandatory workplace safety standards
– Social recognition and professional credibility
– Access to formal loans or financial products
– Maternity/paternity protections
– Benefits like gratuity under labor laws