Tax amendments-November 27 , 2019
Government co-media spokesperson Dr. Bandula Gunawardena stated that certain changes have been made to taxes during the first Cabinet meeting yesterday.(27.11.2019). Changes are as follows.
1.Reduce VAT from current 15% to 8% w.e.f 01 Dec 2019 – VAT on Financial services will remain at 15%.
2.2% NBT will be removed w.e.f 01 Dec 2019– including for Financial Services businesses
3.Telecommunications Levy will be reduced by 25% (current voice levy of 15.3 % to likely to be reduced to 11.25%)
4.Income earned from the supply of services for the receipt of foreign currency shall be exempted from income tax, with effect from December 01, 2019
5.Construction Industry to be placed on 14% income tax instead of 28%
6.IT & enabling services to be made tax free from all taxes
7.Tax free threshold for turnover for VAT to be raised from Rs.1Mn per month to Rs.25Mn per month
8.Farm income from agriculture, fishing & livestock to be made income tax free
9.Debt Repayment Levy charged on banks & financial institutions to be removed
10. Tourism business will be treated as export provided that 60% turnover is sourced from local supplies.
11.Withholding Tax on interest income to be removed for those with monthly interest income less than LKR 250,000.
12.PAYE tax free threshold to be increased to LKR 250,000 from current LKR 100,000 per month for all public & private sector employees w.e.f 1 Jan 2020
13.Economic Service Charge (ESC) to be removed.
14.The personal income tax would be exempt for LKR 250,000 per month from any earnings, exceeding which incremental LKR 250,000 would be taxed in order of 6%,12% & the balance at 18% compared to the previous provision which had a ceiling rate of 24%.
As per news reports all the other proposals, except for VAT, NBT reduction and changes to PAYE tax threshold will be implemented with immediate effect.
Supporting Document 01-27.11.2019
Implementation of new tax proposals on VAT & NBT - (IRD Circular / Update)-29.11.2019
Implementation of new tax proposals made on Income Tax - (IRD Circular / Update)-29.11.2019
