Clarification demanded over digital tax neutrality before VAT debate

The government must clarify tax neutrality between resident and non‑resident digital service providers before debating the Value Added Tax Amendment Bill. Committee on Public Finance Chairman Harsha de Silva made this demand in Parliament today (23), noting that his committee failed to receive an explanation on the matter.

Domestic digital service providers face taxes on the full value of their transactions, whereas non‑resident providers only face taxation on their earned commissions.

Harsha de Silva pointed out that this discrepancy creates an economic asymmetry that disadvantages national development, even if justifiable through accounting standards.

The previous administration's finance committee argued that taxation should depend on the jurisdiction of consumption rather than production.

Although policymakers adopted this principle, domestic firms face distinct disadvantages without proper neutrality.

Parliament scheduled the second reading of the Value Added Tax Amendment Bill for debate today to widen the tax net and improve compliance.