Sri Lanka replaces VAT, NBT with 8-pct tax, ESC, debit tax removed: Bandula

ECONOMYNEXT – Sri Lanka’s cabinet had approved a cut of value added tax to 8 percent from 15, removed withholding tax on interest, a debit tax and halved income tax on construction companies, Cabinet spokesman Minister Bandula Gunewardene said.

A 2 percent Nation Building Tax on domestic goods and services would also be removed.

A capital gains tax on stocks, a debt tax on financial institutions and debt service tax had also been removed.

The turnover based tax would be effective from December 01, Gunewardene said. Income tax change may take effect later, he said.

The Pay As You Earn deduction from wages had also been removed, he said.

Both PAYE and ESC are advance collection on income taxes.

Thresholds on some taxes including VAT have been raised.

An existing telecommunication tax would be cut by 25 percent. Inward remittances would be freed from taxes, he said.

Co-cabinet spokesman Ramesh Pathirana said import taxes on a range of imports will be lifted. These could include tea and rubber.

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