Sri Lanka key tax changes in 2019 budget

ECONOMYNEXT- Sri Lanka has hiked taxes on cigarettes, international credit card transactions, and gambling, but will phase out para tariffs on imports, Finance Minister Mangala Samaraweera said while delivering the 2019 budget.

Tobacco & Liquor

A Nation Building Tax (NBT) will be levied on cigarette production from June 01.

Accordingly, cigarettes longer than 60 millimetres will see excise duties increase by 12 percent.

The average increase will be 5 rupees per cigarette stick.

The minimum annual duty increase will capture inflation and economic growth, Samaraweera said.

A 2,500 rupee tax per kilo of beedi (a cottage industry) cggarette will be raised to 3,500 rupees, he said.

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It will increase the price of a stick of beedi by 50 cents, Samaraweera said.

Excise duties on locally manufactured alcohol will increase annually, based on inflation and growth indices, Samaraweera said.

"Increase of Excise duty on hard liquor manufactured locally by 8 percent (Excise duty on Special Arrack remains without change) and malt liquor by 12% percent will be done based on indexation effective from March 06, 2019," he said.

Changes to excise duties on tobacco, liquor, and select goods will bring in 39 billion rupees in revenue, Samaraweera said.

Food & Beverage

The sugar tax has been revised.

Soft drinks with less than 4 grams of sugar per 100 millilitres and fruit-based drinks with less than 8 grams per 100 millilitres will be exempt from the sugar tax.

The sugar tax will now charge 40 cents per gram over the exempted limit, down from 50 cents earlier.

Vehicles & Transport

Higher vehicle excise duties have been slapped, with small vehicles such as a Wagon R getting a 20 percent increase.

The tax rate applicable to electric cars was brought down from 12,500 rupees a kilowatt to 10,000 rupees. 

axes on “buddy” trucks with a cargo capacity of less than 2,000 kilos was brought down, but it was not clear by how much.

Trucks are also due to be taxed at an unspecified lower rate.

Vehicle tax changes are expected to bring in 48 billion rupees in additional revenue to the state.

Tolls on expressways will be increased by 100 rupees during peak hours effective from 1st April 2019.

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Fees for special number plates have been increased, Samaraweera said.

Personalized place with a name can now be obtained for 1 million rupees.

Embarkation Levy will be increased by 10 US dollars to 60 US dollars per passenger.

Passport issuance fee has been increased by 500 rupees to 1,000 rupees per passport.

One day service fee has been increased by 50 percent to 15,000 per passport.

Normal passport service fee has been increased to 3,500 rupees from 3,000 rupees per passport.

The Embarkation Levy and passport fee revision is expected to bring in 8 billion rupees in 2019.

Credit Cards

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A 3.5 percent NBT will be charged on international credit card transactions.

"This tax will apply to foreign payments made using Electronic Fund Transfer Cards (both Debit and Credit cards) to purchase goods or services including offshore digital services," Finance Minister Samaraweera said.

An existing stamp duty on all credit card transactions will be lifted.

Gaming

Annual license fees of casinos will increase to 400 million rupees from 200 million rupees from April 01. Annual fees for rudjino games will increase to 1 million rupees.

A casino turnover levy will be charged at 15 percent.

A casino entrance fee of 50 US dollars per person will be charged, effective from June 01.

Para-tariffs

Para-tariffs on imports will be phased out over five years, while products related to tourism, manufacturing and construction will be free of para-tariffs over three years.

The Port and Airport Levy on boilers, machinery and electrical items will be cut to 2.5 percent.

The International Telecommunication Operators Levy will be removed, Samaraweera said.

The Treasury is expected to give up 6 billion rupees in revenue with the removal of para-tariffs.

"We will also ensure that 10 percent of all HS codes, considered to be sensitive items, will not be subject to a complete para-tariff phase-out," Samaraweera said.
(Colombo/Mar05/2019)