Sri Lanka to bring income tax law changes in 6 weeks
Jul 16, 2018 10:32 AM GMT+0530 | 0 Comment(s)
ECONOMYNEXT - Sri Lanka will bring amendments to a new income tax law within six weeks to iron out problems that have cropped up during implementation which will include some 'tweaking' of personal income taxes, ministers have said.
"We have witnessed some problems during the implementation of the law. We are already correcting these," Finance Minister Mangala Samaraweera told reporters last week.
“There are many small changes which are required and we will discuss and present them to the parliament within the next six weeks,” he said.
Samaraweera confirmed that one of the changes would be the exemption of income tax for foreign financial institutions that lend to Sri Lankan businesses.
Finance Ministry officials had said that it would be difficult to collect taxes from these institutions, and may affect local rates adversely.
Samaraweera also said that the coming changes would include more benefits to those in the pay as you earn (PAYE) tax scheme, as was announced by National Policies and Economic Affairs State Minister Harsha de Silva on twitter last week.
“Await some tweaking to the #SriLanka PAYE tax calculation to benefit mid and upper mid level executives; bulk of private sector. What Com Gen can adjust; on vehicle benefits etc already up on IRD website. Additional relief of cash benefits coming,” de Silva tweeted.
Sri Lanka's new administration hiked personal income tax, ending a car allowance of up to 50,000 per person.
The highest income tax rate was also hiked from 16 to 24 percent, in a bid to bring in 'revenue based fiscal consolidation' after giving massive salary hikes to state workers and subsidies to others.
The new administration also slammed income tax on medical care taking people by surprise, despite claiming that government taxes people to provide education and medical care.
The proposal to tax education was rolled back before the value added tax was enacted.
Meanwhile price controls are planned on private hospitals which may prevent its expansion, and put people in further trouble.
Taxes on education was rolled back, and some reduction in medical care taxes has also been promised.
Sri Lanka's new income tax law is a break from the past, which had led to widespread tax avoidance and brings in new methods in income taxation along with automation.
"This has been hailed as one of the most progressive tax laws in Asia,” Samaraweera said.(COLOMBO, 16 July, 2018)