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Message: <blockquote data-quote="topkollek" data-source="post: 31551840" data-attributes="member: 510150">in standard economics, higher prices generally lead to weaker demand (the law of demand), all else equal.How this applies to Sri Lanka’s IT/BPO sectorIn the recent discussion:<ul> <li data-xf-list-type="ul">Taxes (the shift to 15% on service-export income + new digital VAT on tools/cloud services) raise costs for Sri Lankan IT firms.</li> <li data-xf-list-type="ul">Firms often pass some of those higher costs on to clients through higher prices or reduced margins.</li> <li data-xf-list-type="ul">Clients (mostly in the US and Europe) then face more expensive Sri Lankan services relative to competitors in India, Vietnam, the Philippines, etc.</li> <li data-xf-list-type="ul">Result: weaker demand for Sri Lankan IT/BPO work, slower new contracts, or clients shifting elsewhere.</li> </ul>This is one channel through which taxes can contribute to softer export numbers — even if it is not the main driver (global economic slowdown in client markets and AI reducing traditional coding/BPO hours are larger factors).grok</blockquote>

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