By: Staff Writer
April 17, Colombo (LNW): Sri Lanka Government is now facing the challenge of introducing the Information Technology (IT) industry policy as the country’s gig economy (informal sector in IT industry) holds the potential to accommodate and benefit a significant portion of the country’s population, especially with the upcoming implementation of the National Digital Strategy, an IT expert and pioneer in the industry said
As the world revolves around the digital landscape, Sri Lanka has also become competitive in the digital world, but under the present situation of imposing 15 percent tax on IT services and us President Donald Trump’s 44 percent tariff imposition on Sri Lanka’s would rock the country’s formal and informal sectors
The gig economy broadly refers to an economy where freelancers or independent contractors (gig workers) widely exist in the labour market instead of traditional work arrangements between the employer and employee.
The Government has to consult the experts in the sector immediately to clarify its stance on the gig economy and introduce concrete policies s for the IT formal and informal sectors and e-commerce, including international transactions, to address payment systems, tax revenue, and worker welfare.
Director and Co-founder of Creative Software Sushena Ranatunga an IT expert and pioneer in the industry said that Following the Covid-19 pandemic, companies and individuals are also working with freelancers and seek support from freelancing institutes,”
He added that that Sri Lanka is now moving towards the next level of freelancing, the digital entrepreneurship
Sri Lanka’s Information Technology (IT) industry has experienced significant growth, with revenues increasing from approximately US$ 750 million ten years ago to between $1.5 to 2 billion, headed.
Recent fiscal reforms have introduced new tax measures impacting the digital services sector. While these policies aim to bolster government revenue, they present challenges for IT companies striving to maintain competitiveness.
A notable concern is the regulatory divergence between Sri Lanka’s mainland and the Port City Colombo Special Economic Zone (SEZ). Port City Colombo offers substantial incentives, including up to 25-year tax holidays, exemptions from indirect taxes, and streamlined business operations under the Colombo Port City Economic Commission Act, Mr Ranatunge elaborated.
These advantages create an uneven playing field, potentially disadvantaging IT enterprises operating outside the SEZ. he said.
The recent tax hikes may exacerbate challenges for these entities, increasing the likelihood of tax defaults and hindering their growth prospects.
Data on the exact number of IT product companies in Sri Lanka is limited. But creating such businesses is crucial to diversify the industry away from services.
Encouragement of IT product manufacturing can increase the value addition, innovation, and international tech market standing of the country, he stated.
Strategic Intellectual Property Rights (IPR) Regulations are important to safeguard innovations and attract investments in the IT sector. Sri Lanka has brought its commercial legislation into line with international standards, including intellectual property rights treaties, electronic transactions, and computer crime treaties.
Enforcing and strengthening such laws can also boost investor confidence and foster an innovation culture, he claimed. .
Policy inconsistencies need to be addressed, informal sector transition to formality facilitated, product-based IT business promoted, and IPR protection strengthened as key measures toward maintaining the industry’s growth momentum and providing level playing fields for all the stakeholders.
