ECONOMYNEXT – Sri Lanka is working on starting e-invoices which will be directly linked to the tax office to digitalize the value added tax payments, Deputy Minister of Economic Development Anil Jayantha Fernando said.
“We have to bring the mechanism of VAT collection, calculation and transmission to the government into technology,” Minister Fernando told parliament.
“As a first step, for chosen sectors, especially for high value individuals, this e-invoicing will be introduced. We are taking the required technical assistance and advice from international agencies.
“We will also take this to Point of Sale (POS) machines, where information will be communicated immediately to the Department of Inland Revenue as soon as a sale is made.”
“We will connect exporters as the first step.”
E-invoices will speed up VAT refunds for exporters he said.
At the moment Sri Lanka’s exporters do not have to pay VAT on imports in the first place under a so-called SVAT system.
If VAT is paid upfront, any delay in refunding gives a cashflow benefit for the state.
E-invoicing of VAT allows a tax office not only to track sales but also income tax and third-party revenues and earnings.
Depending on how fast refunds are made, businesses will also have pay tax on inputs.
Vietnam last month introduced e-invoicing leading to protests by SMEs and deserted markets.
Small businesses complained that they will now have to pay tax on credit sales which will cripple them and in case they do not have the technology and knowledge implement such system.
The government has said they are giving accounting software free of charge.
Vietnam however, has a frugal government (it is slashing the public sector by 20-pct), unlike Sri Lanka where the state is expanded to give jobs and tax money to unemployed graduates, and income tax rates are low. Corporate tax is 20 percent and family businesses are taxed at 5 percent or lower.
Sri Lanka is also bringing a digital ID where government officials will be able to track the actions and behaviours of people.
National IDs have been opposed in advanced nations where people have more knowledge about the nature of the authoritarian state, especially on grounds that government officials can invade the privacy of people and politicians can target the opposition and undermine democracy.
The UK scrapped National Identity Card bill and scrapped the National Identity Register in 2010 amid greater awareness of the dangers of giving such sweeping control over the people to the state.
“This bill is the first step of many that this government is taking to reduce the control of the state over decent, law-abiding people and hand power back to them,” the then UK Prime Minister said introducing the ID abolition bill to the ‘mother of parliaments’.
“With swift parliamentary approval, we aim to consign identity cards and the intrusive ID card scheme to history within 100 days.”
However digital IDs are found in more authoritarian states. In Sri Lanka the tax payer PIN and the ID number is different at the moment.
In more authoritarian states it is the same, giving officials and politicians even tighter control to police the people.
In Sri Lanka activists went to court against the digital ID, database and family tree which was originally mooted by the Rajapaksa regime but it is not clear whether the undertakings given by officials were followed.
Related Sri Lanka Supreme Court petitioned on invasion of privacy, central database profiling
In Sri Lanka only the Frontline Socialist Party is warning about the dangers of and Indian-backed digital ID. (Colombo/July02/2025)
