August 17, Colombo (LNW): Income generated by Sri Lankan residents from providing services to clients overseas will be subject to a maximum tax rate of 15 per cent from the 2025/26 year of assessment, according to the Inland Revenue Department.
The clarification is particularly relevant to professionals and freelancers who receive payments from foreign customers through online marketplaces, digital platforms or other remote service arrangements.
Inland Revenue Senior Deputy Commissioner Hiran Meneripitiya said qualifying earnings from the export of services would not be incorporated into the ordinary progressive income tax structure, under which rates can rise to 18, 24, 30 and 36 per cent.
Instead, eligible service-export earnings will be taxed at a rate of up to 15 per cent, providing a separate tax treatment for this category of income.
Meneripitiya said individuals receiving overseas income through digital platforms must include those earnings in their self-assessment tax returns and settle the corresponding liability with the Inland Revenue Department.
He stressed that the responsibility for reporting such earnings and paying any tax due rests with the person generating the income, regardless of whether the payments are received through an online platform or another channel.
The clarification comes as the number of Sri Lankan professionals working remotely for foreign companies and individual clients continues to grow, with freelancing, online consultancy, software development, design and other digital services becoming increasingly important sources of foreign earnings.
The IRD has therefore urged those engaged in service exports to ensure that their overseas earnings are properly declared and that their tax obligations are met under the applicable rules.
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