Sri Lanka clears tax uncertainty on foreign bondholders, lenders
ECONOMYNEXT- Sri Lanka ‘s cabinet of ministers had given the nod to exempt foreign investors in government bonds from taxes on interest and capital gains, the Finance Ministry said as part of a number of revisions to a new income tax law.
Sri Lanka will exempt from taxes "any gain including interest, discount or capital gain earned by non-residents on sovereign bonds denominated in local or foreign currency, issued by or on behalf of the Government."
The exemption will also apply to loans taken by any person from a non-resident.
The new income tax law came in to effect on April 2018.
Interest on bank deposits held by children below 18 years will be exempt from tax. Withholding tax on rent will be cut to 5 percent from 10 percent.
Artists and singers will also get relief.
Royalty payments to locals will be exempt from withholding tax up to 50,000 rupees month and total of 500,000 rupees a year.
Rentals on aircraft leased from abroad will also be exempt.
Deputy Treasury Secretary S R Attygalle had earlier said that the amendments will make the Inland Revenue Act more practical. The government was also concerned about the effect on domestic interest rates as more local firms are looking for foreign debt financing, he had said. (Colombo/Oct23/2018)