In an open letter to IMF Managing Director Kristalina Georgieva, the Independent Commission for the Reform of International Corporate Taxation (ICRICT) expressed concerns about the International Monetary Fund’s approach to the ongoing negotiation of financial assistance to Sri Lanka.
In the letter, the ICRICT expressed concern that the Sri Lankan Ministry of Finance is now under intense pressure from the IMF to abandon their plans for a digital service tax and sign on to the Two Pillar solution as a condition for receiving additional lending from the IMF.
It stated that it is unacceptable for a small and distressed country like Sri Lanka to be pushed to give up its sovereign right to implement a tax policy, digital taxation, at a time when it is most needed, especially since no global agreement providing alternatives has been ratified.
The ICRICT urged the IMF to stop pressuring Sri Lanka to withdraw its proposal for a digital services tax.
It also believes that before offering advice, the IMF should carefully consider 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.
