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Sri Lanka to introduce a proper mechanism to regulate online businesses

By: Staff Writer

Colombo (LNW): The need for a proper mechanism to regulate online business has been discussed in the Parliamentary Committee to raise the value of the Ease of Doing Business Index. The discussions were conducted when the committee convened in Parliament recently.

Currently, Sri Lanka does not have a local body to regulate e-Commerce businesses. Increased competition from international eCommerce sites such as and Airbnb have resulted in demands by the Tourist Hotels Association of Sri Lanka (THASL) for the government to consider regulating eCommerce businesses.

There is still no formal mechanism to regulate business activities conducted on the Internet, tax payments of companies involved in them, and many other factors. The committee discussed the necessity for steps to be taken in this regard.

It has also been suggested that a legal framework as well as a digital service tax should be introduced to regulate these businesses.

Meanwhile, the need to promote digital transactions instead of currency notes and coins was also discussed in the Parliamentary Committee to raise the value of the Ease of Doing Business Index.

E-commerce in Sri Lanka has grown significantly with the increased use of the internet and smart devices, especially during the COVID-19 pandemic.

According to the Information and Communication Technology Agency (ICTA) of Sri Lanka and the United Nations Conference on Trade and Development, Sri Lanka’s Digital Economy was 4.37 percent of GDP in 2022.

The increase has been driven by increased utilization of e-payments, e-banking, online medical consultations, and e-sports. Approximately 43 percent of the estimated 11 million internet users have made online purchases.

The Western Province is the largest e-commerce market geographically, accounting for around 50 percent of total orders.

Products purchased most frequently online are electronics, apparel, and personal care products. Around 56 percent of the internet users’ state they purchased a product or a service after seeing an advertisement on the Internet.

All commercial banks have online banking services. Travel companies, hotels, and a few large retailers have online trading services. eCommerce companies offer customers in Sri Lanka access to millions of global products.

The government has committed to increase the use of online applications and payments for government services. Additional government web portals for filing of tax returns, payment of taxes, renewing of revenue licenses are also available.

Most of the global eCommerce sites, including PayPal, are available in Sri Lanka for overseas purchases but have limitations due to an inadequate refund mechanism and inward receipts.

A 2.5 percent stamp duty applies to usage of credit cards issued by Sri Lankan banks for transactions converted into a foreign currency. Transactions in local currency are exempted from this duty.

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