- Tax exemptions offered for investments made in
Northern Province
- Individuals with a monthly salary of LKR 100,000 will
be tax exempted
- SMEs and identified sectors will get a tax reduction
from 28% to 14%
- PAYE tax will be enforced at end October, new act
enforced from 1 April 2018
- Monthly interest income of senior citizens up to Rs.
125,000 will be tax exempted.
The Inland Revenue (IR) Bill was passed in Parliamentyesterday, allowing the Government to scrap the complicated tax system and
establish a “fair but transparent” tax policy for Sri Lanka with plans to
increase Government revenue from direct tax.
Minister of Finance and Mass Media Mangala Samaraweera
stated, “The Government will reduce the gap between direct tax and indirect tax
by 2020, enabling the nation to move forward”. According to the Minister, state
revenue has declined drastically during recent past. In 1990 state income stood
at 19% of the GDP but has declined continuously to 10% by the end of 2014.
Summing up the debate, State Minister of Finance Eran
Wickramaratne stated that people will be taxed based on the income they receive
from the respective activities they are engaged in. “We will not tax the
beggars, but if a beggar is engaged in a business, yes that business will be
taxed. But if a businessman is making an investment, proper accounting will
help him to enjoy capital allowance within a specified period. This will allow
them to recover the investment and encourage him to make more investments. SMEs
will have 14% tax. Exporters will also have 14% tax, which is the lowest tax
percentage under the new Act. Tax policies were made by not looking at large
businesses,” he said.
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