9 January 2017 10:32 am
By Chandeepa Wettasinghe
The Finance Ministry is currently developing the platform that online booking websites would have to become subservient to, the country’s tourism officials said last week, although refusing to provide information on how far discussions with the market players have advanced.
“This platform will sit above the other booking engines. Finance Minister Ravi Karunanayake is spearheading this,” said Dinesh Weerakkody, Advisor to Tourism Christian Religious Affairs Minister John Amaratunga.
He noted that the State is losing out around US$ 1 billion in tax revenue under the current status quo. Sri Lanka’s entire tourism industry earned US$ 3.5 billion in 2016.
The proposal to introduce a ‘common technology platform’ was presented in the 2017 budget, which however envisaged collecting only Rs.25 billion more from the exercise.
The government has been in discussions with online travel agents for months now, although Sri Lanka Tourism Development Authority Director General Malraj Kiriella refused to provide any details.
Kiriella refused to also divulge whether the discussions were advancing in a positive or negative manner, or if even if one of the multitude of online operators has agreed to the government’s terms.
How the Sri Lankan government’s method of creating a common platform that connects all the booking engines will affect the security of their intellectual property and customer information remains to be seen.
In the face of government highhandedness, global e-commerce giants have in the past opted not to enter Sri Lanka, and experts such as LIRNEasia Chairman Professor Rohan Samarajiva have expressed concerns that new interference would lead to those operating in Sri Lanka to leave the country as well.
However, some platforms such as Airbnb have a history of collecting taxation from customers and providing them to governments, if requested.
Officials admitted that many budget accommodation units are not eligible to pay taxes, which would require amendments to existing legislation.
This would mean that a majority of the taxes would have to be collected from the taxation of the value addition of the bookings, and the tourism levies that the online booking engines would have to pay.