ICRICT expresses concerns on IMF approach on Sri Lanka

COLOMBO (News 1st) - The Independent Commission for the Reform of International Corporate Taxation (ICRICT) has expressed concerns on the International Monetary Fund's approach to the ongoing negotiation of financial assistance to Sri Lanka, in an open letter to IMF Managing Director Kristalina Georgieva.

The ICRICT, in the letter said that it is alarmed to be informed that the Sri Lankan Ministry of Finance is now under severe pressure from the IMF to drop their plans for a digital service tax and to sign on to the Two Pillar solution as a condition for receiving additional lending from the IMF.

It said that it is unacceptable that a small and distressed country such as Sri Lanka is being pushed to give up its sovereign right to introduce a tax policy, digital taxation, at a time when it is most needed, especially so before there is a ratified global agreement providing for alternatives.

The ICRICT urged the IMF to stop pressuring Sri Lanka to withdraw its digital services tax proposal. 

It also believes that the IMF should consider carefully, before offering advice, whether developing countries should sign up to the Two Pillar solution or pursue alternatives that are available, feasible, and generate public resources to invest in recovery and climate mitigation and adaptation.

It said that in any case, the IMF should not put pressure on any country to drop any such alternative measure to raise much-needed public resources in the absence of any legal requirement to do so under an agreed international convention.

The Commission stands ready to engage with the Fund in a dialogue on this issue to ensure that they continue to work together towards an international tax architecture that works for the benefit of all countries.