Inland Revenue Act to equally net professionals

The Sri Lankan tax structure would be simplified under the new Inland Revenue Act said Thanuja Perera consultant to Sri Lanka’s Finance Ministry.

She was speaking at a seminar organized by National Chamber of Commerce Sri Lanka yesterday. Perera said that under the new act professionals too would be taxed equally.

Sri Lanka will tax foreign currency deposits in the future in the same manner as rupee deposits through a new income tax law that will come into effect next year, she added.

Perera said under the new law, a withholding tax of 5 percent will be deducted by banks as a final tax, up from 2.5 percent. Companies will be liable at 5 percent, but it will not be the final tax and will form part of the taxable income.

Ivan Dissanayake Director General Inland Revenue said with online and RAMIS to be implemented the new tax structure would be also user friendly. It would come in to effect from April 1, 2018.

Sri Lanka’s primary dealers in government securities will be taxed at 28% under a new income tax law that will come into effect, said Sulaiman Nishtar, Partner at Ernst and Young.

Primary dealers in government securities borrow short term money and invest in longer term bonds at higher rates earning. Under a new Inland Revenue law capital gains are taxed at 10 percent and interest income at 28 percent for companies.

Non-resident foreign currency accounts were exempted from tax as an incentive not to keep dollars earned abroad in foreign banks.

Foreign currency earnings from services provided by individuals or partnerships up to 15 million rupees will be exempt, protecting most guest workers. Currently, all such income is exempted said Partner, Ernst and Young. Duminda Hulangamuwa

Income from dollar-denominated Sri Lanka Development Bonds will also be taxed. He said it was necessary to bring in a new Inland Revenue act to broaden the tax net.