Reforming mobile sector taxation in Sri Lanka 2018

Mobile telephone services are playing an increasingly important role in supporting economic growth and social inclusion in the developing world. Mobile penetration and affordability enhance digital connectivity by expanding internet and broadband access, which in turn facilitate the reduction of barriers for trade, commerce, communication, service delivery and human development. Conducive regulatory conditions offer the mobile industry the support it needs in order to thrive and maximise the opportunities available to consumers, businesses and governments. Within this, taxation is an important factor and there is a need to achieve the right balance between revenue maximisation, economic growth and social development. In order to assess the potential benefits of a more efficient tax structure in the mobile sector, one which focuses on increasing mobile affordability and unlocking digital inclusion, the GSMA has commissioned EY to undertake a study of the economic impact of potential tax reforms on the Sri Lankan mobile sector. This report analyses recent developments in the mobile sector and its tax treatment in Sri Lanka, sets out potential options for tax policy reform and estimates the impacts of these policy options on: the mobile sector, the wider economy and the Government’s fiscal position.