Sri Lanka to cut withholding tax on interest, rent, royalties
ECONOMYNEXT – Sri Lanka will cut withholding tax on rent from 10 percent to 5 percent and exempt royalties from withholding tax for up to 50,000 rupees a month, under tax changes proposed by Finance Minister Mangala Samaraweera approved by the cabinet of ministers.
The exemption on a slab of 50,000 will remove many artistes who were receiving small royalty payments, which had become a political hot potato.
In most countries, it is a practice to exempt a slab for taxes including capital gains on stocks. The exemption on royalty payments will be subject to a total of 500,000 rupees a month.
Sri Lanka will also exempt interest children’s deposits from withholding tax.
Interest income of up to 50,000 rupees on deposits at banks by individuals and joint accounts will be exempt from withholding tax up to a limit of 500,000 a year.
Senior citizens will be exempt on interest income up to 3.0 million rupee a year from the current 1.5 million rupees.
Exempt interest income will not be subject to income tax. Above the exempt limit a 5 percent withholding tax will be charged, which will be a final tax.
Interest income from non-resident and resident foreign currency accounts (NRFC and RFC) have also been exempt from tax. (Colombo/Jan09/2018)