ECONOMYNEXT – Sri Lanka has raised a tax free threshold for pay as you earn (PAYE) tax on salaries from 750,000 to 2.4 million rupees a year and corporate income tax will be at 15 and 30 percent, Finance Minister Ravi Karunanayake said.
All other personal income tax will be charged 15 percent, he said. No exemptions will be given.
Corporate income tax will be brought down to 15 percent for most companies from 28 percent. The higher 30 percent rate will apply to alcohol, tobacco and gaming firms.
They will also be charged a 25 percent sur-tax he said.
Casino will be charged a 400 million rupee annual fee.
Cars older than three years would be charged 5,000 rupees as an emission tax, yielding 18 billion rupees.
A tax on stock transactions would be removed losing 2.5 billion rupees.
Exemptions to value added tax would be removed.
The rate on Nation Building Tax (NBT), a cascading tax, would be doubled to 4.0 percent. The goverment is expecting 90 billion rupees from the move.
Sri Lanka needs more money to pay salaries of state workers which were hiked by 10,000 rupees a month and also higher pensions and fertilizer subsidies for farmers, for which taxes are needed.
In 2015 by printing money to finance the spending, the rupee has collapsed from 131 to 142 to the US dollar this year, destroying the real salaries of workers and their lifetime savings in banks. The administration has now started slamming price controls to prevent prices going up due to excess demand from money printing.