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.