Sri Lanka to exempt from tax interest income of foreign lenders

ECONOMYNEXT- Sri Lanka’s Finance Ministry is planning to exempt interest income of foreign lenders from taxation by the end June 2018, official said.

Under the Inland Revenue Act No. 24 of 2017 which came into effect in April 2018, any non-resident who earns income in Sri Lanka is liable for taxation, which for the first time included foreign lenders earning interest.

Treasury Deputy Secretary S. R. Attygalle however said that collecting taxes on interest income from foreign financial institutions has proved to be challenging.

He also said that enforcing the law may have unintended impacts on local interest rates, since financial institutions in Sri Lanka are increasingly looking towards foreign lenders for their funding needs.

Attygalle said that the exemption will be a part of a number of other amendments to be made, after considering the practicality of some sections of the new Inland Revenue legislation.

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