Sri Lanka imposing tax on humanitarian aids

The new tax regime was unveiled in 2006 but not enforced immediately. Most agencies did not comply, as they hoped to persuade the Government to change it, according to aid workers. In the past year, however, the Government has grown increasingly hostile towards foreign aid groups and Western donors, accusing many of sympathising with the Tamil Tiger rebels, who were defeated in May. It has started to insist that local and international non-governmental organisations (NGOs) should pay the 0.9 per cent tax on all their funding -- backdated to 2005.

The Government says that the tax is designed to crack down on NGOs that abused Sri Lankan law and squandered their funds on their own staff after the tsunami.

“If it’s non-profit work, it shouldn’t be taxed — there should be incentives to work in particular areas instead,” said Jeevan Thiagarajah, the executive director of the Consortium of Humanitarian Agencies.

“If it’s non-profit work, it shouldn’t be taxed there should be incentives to work in particular areas instead,” said Jeevan Thiagarajah, the executive director of the Consortium of Humanitarian Agencies.

“This is money on which people have already paid tax in their own countries and which is supposed to be helping people in need,” said one aid worker. “This is a desperate money-making measure by the Government.”

Many aid groups are paying the tax out of central contingency funds because donors did not take it into account and would not allow it to come out of their contributions. Another charity worker said: “This runs contrary to everything that the humanitarian aid community stands for.”