The Inland Revenue Department has confirmed that income earned from exporting services will be taxed at a flat rate of 15% starting from the 2025/2026 assessment year, applicable to individuals providing services to overseas clients through digital platforms.
The Inland Revenue Department (IRD) has officially confirmed that service export income will be subject to a 15% tax rate beginning in the 2025/2026 assessment year. According to IRD Senior Deputy Commissioner Hiran Meneripitiya, this taxation applies to individuals who earn money by providing services to international clients using digital platforms and other remote delivery methods.
The new rate represents a preferential tax treatment compared to standard income tax brackets. Rather than falling under the conventional income tax rates of 18%, 24%, 30%, and 36%, qualifying service export income will face a maximum tax obligation of 15%. This lower rate aims to provide tax relief for Sri Lankans engaged in the growing digital services sector.
Responsibility for tax compliance rests with individual service providers, according to Meneripitiya. Those earning income through digital platforms must declare their earnings via self-assessment tax returns and pay the corresponding tax liability. The IRD's clarification addresses the increasing prevalence of Sri Lankans generating income from overseas clients through service-based work, reflecting the expansion of remote work opportunities in the digital economy.
