ECONOMYNEXT – Sri Lanka is likely to exempt taxes on future interest of bonds issued before the budget in November, but is likely to tax bonds issued after, officials said.
Sri Lanka had exempted taxes on interest income on listed debentures in recent years, which will be redeemed five years or more in the future.
Deputy Treasury Secretary S R Attyalle said there was a view that future interest of the existing debentures issued before the budget should be exempt.
Finance Minister Ravi Karunanayake was also considering it, he said.
Analysts say charging tax on debentures issued earlier, where the promise of a tax-free status was given, will be similar to a retrospective tax.
The new law will come into effect from April 2017.
There is a debate whether to charge the tax from interest on debentures issued from November 2016 to March 2017.
Attygalle said the old bonds were issued and sold based on the calculation of a tax-free status and it was practically difficult to reverse it.
But bonds issued from now onwards can be done on new taxes, he said. (Colombo/Nov15/2016)