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Monday April 15th, 2024

Sri Lanka PAYE tax to stay, high threshold from Jan 01

ECONOMYNEXT – Sri Lanka will keep Pay-As-You-Earn (PAYE), tax for salaries over 250,000 rupees a month, but all personal income will be subject to income tax at a uniform 3,000,000 rupees a year, from January 01, a notice from the tax authorities said.

A cut in income tax for construction companies from 28 to 14 percent, income tax exemption for agriculture, livestock and fisheries and information technology companies will be effective for the current 2019/2020 year of assessment.

Information technology companies have also been released from all other taxes.

Religious institutions will be exempted from income tax from December 01, 2019.

The Inland Revenue Department said the changes are subject to be passed in parliament.

No mention was made about a debt servicing levy or a debit tax on financial services. Earlier, Minister Bandula Gunawardena had announced the removal of these two taxes.

The notice is reproduced below:

As instructed by the Ministry of Finance, new tax proposals made for Income Tax and approved by the Cabinet of Ministers, will be implemented subject to formal amendments to relevant legislation.

1). Income from Agriculture, Fisheries and Livestock shall be exempted fromincome tax, with effect from the year of Assessment 2019/2020.

2). Income Tax Rate applicable on construction industry shall be reduced from28% to 14%, with effect from the year of Assessment 2019/2020.

3). Religious institutions shall fully be exempted from income tax, with effect from December 01, 2019.

4). Tax free threshold of the employment income of all public and private sectoremployees for the purpose of the Pay-As-You-Earn (PAYEE) shall beincreased from Rs. 100,000 to Rs. 250,000 per month and the excessive (sic) personal income shall be liable for income tax at the progressive rate of 06%,12% and 18% for each tax slab of Rs. 250,000, with effect from January 01,2020.

5). Interest income up to Rs. 250,000 per month shall be exempted from theWithholding Tax (WHT), with effect from January 01, 2020.

6). Income of an individual up to Rs. 3,000,000 per annum from any source ofincome shall be exempted from income tax and the excess income to thatamount shall be liable for income tax at the progressive rates of 06%, 12% and18% for each tax slab of Rs. 250,000, with effect from January 01, 2020.

7). Income earned from the supply of services for the receipt of foreign currencyshall be exempted from income tax, with effect from December 01, 2019.

8). Income from the Information Technology and enabling services shall beexempted from all taxes, with effect from the year of Assessment 2019/2020.

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Sri Lanka to discuss two contentious points with bondholders: report

ECONOMYNEXT – Sri Lanka and sovereign bondholders are to discuss two matters in the near future which the two sides failed to reach agreement at March talks in London, a media report quoting a top aide to President Wickremesinghe as saying.

Sri Lanka and bondholders had discussed four matters on restructuring international sovereign bonds in late March and agreement had been reached on two, President’s Chief of Staff Sagala Ratnayake was quoted as saying on state-run ITN television.

A restructuring proposal by bondholders was not in line with IMF requirements, and Sri Lanka had sent a counter proposal, he said.

The matters will be discussed at round of talks in the near future.

Sri Lanka was optimistic of reaching an agreement with the bondholders before June, officials have said.

According to matters already in the public domain, sovereign bond holders are keen to get a bond tied to dollar gross domestic product, as they feel IMF growth projections are too low.

In past re-structuring so-called value recovery instruments, a type of warrant, gave their owners extra payments if a country did better than expected and were tied to items like oil prices.

Bondholders had initially proposed bond which would have a lower hair cut initially, and it will have additional hair cuts if growth is low (about 3.1 percent) as projected in an IMF debt sustainability analysis. (Colombo/Apr15/2024)

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BIMSTEC Secretary General visits Sri Lanka, discusses regional cooperation

ECONOMYNEXT – The Secretary General of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), discussed measures to enhance regional cooperation, during his visit to the island last week.

Ambassador Indra Mani Pandey, Secretary General of BIMSTEC visited Sri Lanka from 07 – 12 April 2024, following his assumption of office as Secretary General of BIMSTEC in January this year.

The Secretary General “met with senior officials of relevant Ministries/Agencies to discuss measures to enhance regional cooperation under various BIMSTEC initiatives,” the Foreign Ministry said in a statement.

Several BIMSTEC countries have bilateral trade agreements, such as Sri Lanka and India, Thailand and Myanmar, Sri Lanka and Thailand, but no collective regional agreement to enable intra-regional leverage.

During the visit, Secretary General Pandey held discussions with Ministry of Foreign Affairs officials and paid courtesy calls on the President and the Minister of Foreign Affairs.

Secretary General Pandey participated at an event on “Regional Cooperation through BIMSTEC” organized by the Lakshman Kadirgamar Institute (LKI) on 9 April. (Colombo/April15/2024)

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Sri Lanka rupee closes weaker at 299.00/10 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 299.00/10 to the US dollar in the spot forex market on Monday, from 298.50/55 on Wednesday, dealers said, while bond yields were broadly steady.

A bond maturing on 15.12.2026 closed stable at 11.30/35 percent.

A bond maturing on 15.09.2027 closed stable at 11.90/12.00 percent.

A bond maturing on 15.12.2028 closed at 12.10/20 percent up from 12.10/15 percent.

A bond maturing on 15.09.2029 closed stable at 12.20/40 percent. (Colombo/Apr15/2024)

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