Sri Lanka budget targets could be met despite tax cuts: Finance Ministry
ECONOMYNEXT – Sri Lanka’s finance ministry said budget targets could be met in 2018 despite tax cuts, announced Thursday, by trimming capital expenditure, after Mahinda Rajapaksa was appointed Finance Minister.
"..[The] government is confident that the primary surplus of 1.8 percent of GDP and the budget deficit of around 4.9 percent of GDP that have been targeted for 2018 could be achieved in support for further fiscal consolidation to provide economic stability," the Finance Ministry said.
Sri Lanka cut prices of fuel and slashed a number of taxes, raised the threshold on personal value added tax and lifted withholding tax on deposits.
A tax rate of 14 percent tax rate for agriculture businesses will be made available to individuals engaged in farming, bringing their rate down from 24 percent.
A concessionary tax rate of 14 percent on SME categories will be "extended to include individuals including those providing professional services," the statement said, brining the rate down from 24 percent.
The threshold for value added tax will be raised to 24 million rupees from 12 million for small businesses.
For wholesale and retail, the VAT threshold will be raised from 50 to 100 million rupees.
Withholding tax on interest on deposits has been lifted.
Remittances will be exempted from tax.
Telecom tax cut from 25 percent to 15 percent.
"The necessary Gazettes for the aforementioned tax related proposals will be issued today and Cabinet approval is sought to amend the necessary tax laws," the Finance Ministry statement said.
In Sri Lanka though the parliamnet is in theory in control of finances, some import taxes are changed through midnight gazette by decree. The statement came as Sri Lanka is in the grip of a political crisis after President Maithripala Sirisena appointed Mahinda Rajapaksa as Prime Minister and Finance Minister and the parliament is suspended. (COLOMBO, 01 November, 2018)