Monday Sep 07, 2026
Monday Sep 07, 2026
Monday, 7 September 2026 05:56 - - {{hitsCtrl.values.hits}}
Industry and Entrepreneurship Development Deputy Minister Chathuranga Abeysinghe was drawn into a public dispute on LinkedIn over the past day after a technology entrepreneur accused the Government of repeatedly changing the tax terms offered to companies registering at the Colombo Port City Special Economic Zone (SEZ).
The exchange was triggered by a post from Shavini Fernando, Founder of a Virtual Reality (VR) and web design and development firm, who said her company applied to register at Port City last year after being told employees and companies would face zero tax for three years, prompting her to set up a local office rather than continue engaging staff as consultants. She said applications, including hers, were subsequently held pending changes to the law, after which she was told in a meeting with Port City officials last December that employees would pay 15% and the company 7%, terms she accepted before completing registration.
Fernando said those terms have since changed again, with employees now facing the same 36% income tax rate applied to companies operating from the Sri Lankan mainland, eliminating the incentive that had drawn her to register in the first place.
“You are ripping off investors,” she wrote, adding that she was reconsidering the arrangement and might instead consolidate operations in Dubai.
Responding on the same thread, Deputy Minister Abeysinghe pushed back on the characterisation of the matter as a personal negotiation, saying Port City investors, including Fernando, had been briefed on the change in law by the Port City Commission, and that close to 90 applications had been held pending its amendment. He said the revised law was unambiguous, with all individuals taxed under the Inland Revenue Act and “no arbitrage between Port City and main land.” In a later reply, Abeysinghe apologised for the confusion, saying his general understanding was that individuals earning foreign income are taxed at 15%, and that further clarity on how the rule applies to Port City’s Approved Persons would be provided.
The confusion appears rooted in how income is classified once received. Corporate finance professional Rasanja Perera, also commenting on the thread, noted that under the mainland tax structure, foreign income received into a Sri Lankan bank account in foreign currency is taxed at 15%, while income treated as local is taxed at 36%, a distinction he said applies at Port City as well. Fernando said her dispute centred on exactly this point, as payments processed through her company’s US dollar account were being treated as local income and taxed at the higher rate.
The thread drew wider commentary from other investors and professionals questioning Port City’s competitiveness against rival free zones. One user cited the Dubai International Financial Centre (DIFC), where corporate tax falls from 25% to zero, as an example of the kind of certainty Sri Lanka would need to offer to attract capital, while others, including a corporate lawyer who has separately written on the subject, said similar concerns were being raised by other current and prospective Port City investors over the zone’s value proposition relative to regional peers.
