By The Great Tax Escape: How Sri Lanka’s Freelancers are Plotting Their Next Move
For Dilan, a 32-year-old software developer working remotely for US clients, life was good. He earned in dollars, worked from home, and best of all—paid zero taxes on his income. But that golden era is about to end.
Starting April 1, 2025, Sri Lanka’s government will slap a 15% tax on export service income, putting thousands of freelancers, IT professionals, consultants, and marketers directly in the tax net.
“What’s the point of bringing in foreign exchange if they’re just going to take a cut?” Dilan grumbled, scrolling through WhatsApp chats filled with frustrated freelancers.
But while the government plans to tighten its grip, Sri Lanka’s digital workforce is already plotting its great escape.
From Tax-Free to Tax Trap 💰⛓️
Until now, those earning in foreign exchange through exported services were exempt from income tax. The new tax means:
✅ Freelancers earning over Rs. 1.8 million annually will be taxed.
✅ The first Rs. 1 million at 6%, and the rest at 15%.
✅ Companies will face a flat 15% tax on profits.
The government claims it’s still lower than the 30% tax on merchandise exports, but many aren’t convinced.
“I’m not paying a cent,” declared Nisal, a digital marketer. “We’ll find another way.”
The Great Digital Tax Dodge 🚀
While the government tightens tax laws, freelancers are already one step ahead. Across Telegram groups and Twitter spaces, discussions are heating up on ways to avoid getting caught in Sri Lanka’s tax net.
🔥 Crypto Payments – Some are switching to Bitcoin, USDT, and Ethereum, accepting payments directly into crypto wallets with no bank records.
🏝️ Offshore Accounts – Others are setting up companies in Dubai, Singapore, or Estonia, legally invoicing clients abroad while keeping earnings out of Sri Lanka’s reach.
💳 Foreign Payment Platforms – PayPal, Wise, Payoneer, and Revolut accounts registered under foreign addresses are becoming freelancers’ new best friends.
🏦 Second Bank Accounts – A few are looking at bordering countries like India or Malaysia, setting up bank accounts to withdraw money tax-free.
💸 Cash Withdrawals – Some are converting digital money into cash using intermediaries, avoiding bank transfers altogether.
“This government thinks they can track everything, but the world is bigger than their tax office,” laughed one freelancer.
Government’s Counterattack 🕵️♂️
But Sri Lanka isn’t backing down. The Inland Revenue Department (IRD) is launching a massive crackdown:
📡 Transaction Tracking – The Central Bank’s ITRS system monitors all foreign transactions entering Sri Lanka.
🕵️♂️ Spending Surveillance – Large purchases (real estate, cars, luxury goods) will be flagged to identify tax dodgers.
🌍 Global Info-Sharing – Sri Lanka has agreements with 46 countries to access offshore bank details of citizens suspected of tax evasion.
🚔 Heavy Penalties – Those caught face steep fines, criminal charges, and even asset seizures.
“There is no statute of limitations on tax evasion,” warned IRD officials. “We can come for you at any time.”
Who Wins This Game? 🎭
With $3.4 billion in foreign earnings at stake, the government wants its cut—but the digital workforce isn’t giving in without a fight.
🔹 Will skilled freelancers stay and pay or move their money offshore?
🔹 Can the government’s monitoring systems keep up with crypto and foreign accounts?
🔹 Will Sri Lanka end up losing talent as professionals relocate to tax-friendly countries?
For now, Dilan and his friends aren’t waiting to find out.
“The government is playing checkers, but we’re playing chess,” Dilan is not alone
