The Sri Lankan Government is trying to siphon off millions of pounds of humanitarian aid by imposing a tax on all funding for aid groups, The Times newspaper reported Monday.
Aid workers told the paper that Burma was the only other country that they could remember imposing such a tax — one of several new measures hampering their efforts to help victims of Sri Lanka’s civil war.
Colombo is backdating taxes to 2005, the paper also said.
The government has started to insist that local and international non-governmental organisations (NGOs) should pay the 0.9 per cent tax on all their funding.
That could amount to several million pounds, as there are at least 89 such international and local organisations in Sri Lanka, mostly helping victims of the 2004 tsunami and the civil war.
The new tax regime was unveiled in 2006 but not enforced immediately, the paper said.
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 Tigers, it said.
“If it’s non-profit work, it shouldn’t be taxed — there should be incentives to work in particular areas instead,” Jeevan Thiagarajah, the executive director of the Consortium of Humanitarian Agencies, told the paper.
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.
Aid workers, however, say the new rules do not grant tax exemption for all the work they are doing — and want to do — to help 300,000 Tamil refugees in army-run camps.
Some say the tax contravenes the international disaster response guidelines drawn up by the Red Cross in 2007 with the participation of 140 countries, including Sri Lanka.
“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.”
Another charity worker said: “This runs contrary to everything that the humanitarian aid community stands for.”
Most aid groups already have to pay tax on imported equipment, such as vehicles, as in many other countries.
In 2005, Oxfam was forced to pay more than £600,000 in tax for importing 25 Indian four-wheel-drive vehicles to Sri Lanka for tsunami relief — despite the Government announcing a temporary waiver for aid groups.
World Vision, the US-based Christian relief group, has paid $120,000 for 2005-06, and made advance payments of $200,000 for the following three years, according to its accounts.
“There are vast discrepancies between individual agencies,” said Mr Thiagarajah. “There’s quite a few whose tax files are still open.”