Sri Lanka's government will raise the country's telecom tax from 11.25 percent to 15 percent as part of a broader series of tax increases, and the value added tax will also be raised from 8 percent to 12 percent.
The Telecommunications Regulatory Commission of Sri Lanka (TRCSL) has reportedly been ordered by new Prime Minister and Finance Minister Ranil Wickremesinghe to implement the telecom tax hike immediately. The tax increase reverses a previous tax cut implemented in December 2019, when the tax rate was reduced from 15 percent to 11.25 percent. The government argues that this "resulted in a 28% drop in revenue, from R$18.3 billion in 2019 to R$13.1 billion in 2020."
The government is considering a broader income tax reform, with the prime minister's statement saying that tax revenues will be reduced by 600 billion Rajapaksa 800 billion Rajapaksa per year after Gotabaya Rajapaksa is elected president at the end of 2019. Rajapaksa has implemented a wave of tax cuts that critics say have led to a massive loss of government revenue and exacerbated Sri Lanka's current economic crisis.
However, the shortage of government funds has not deterred the ambitions of state-backed fixed and mobile operator Sri Lanka Telecom (SLT-Mobitel), which has unveiled plans to connect its fiber optic network infrastructure to communities in all regions of the country as part of its Million Fiber Project.
STL-Mobitel plans to deploy one million fiber-optic connections in a "record time" to enable seamless access and enter the era of digital services. Currently, about 500,000 households in Sri Lanka have fiber optic access and the operator has set a target of achieving 2 million fiber optic connections by the end of 2023.
