Committee on Public Finance (COPF) Chairman MP Harsha de Silva today called on the government to clarify tax neutrality between resident and non‑resident digital service providers before the debate on the Value Added Tax (Amendment) Bill.
“We would like the government to make a clarification, because the COPF committee did not get a clarification,” he told Parliament, stressing that the issue must be addressed before proceeding with the second reading of the Bill.
He pointed out that the concern stems from differing tax treatment: local digital service providers are taxed on the full value of transactions, while non‑resident providers are taxed only on the commission they earn.
MP Harsha noted that while this may be defensible from an accounting point of view, it creates an asymmetry from an economic and national development perspective.
He recalled that under the previous government, COPF had argued taxation should be based on the jurisdiction of consumption rather than production.
While this principle has now been adopted, he warned that domestic providers risk being disadvantaged unless neutrality is ensured.
The second reading of the VAT Amendment Bill, which seeks to widen the tax net and strengthen compliance, is scheduled for debate in Parliament today (23). (Newswire)