STAFF CORRESPONDENT
COLOMBO: The 76th Budget Speech was read in Parliament Friday, November 12 where one-time taxes were proposed by the Minister of Finance on the basis that all revenue proposals were proposed to strengthen the government’s financial position. Further the Minister said, that it is expected that these proposals will become helpful to rebuild the economy from the post Covid position.
A 25% one-time tax was proposed to be imposed on persons or companies with taxable income over Rupees 2,000 million for the year of assessment 2020/2021.
The Minister revealed that, Rs 100 billion is expected to be earned through this tax.
A similar one-time tax was introduced in the Finance Act, No. 10 of 2015 which was proposed by the then Finance Minister Ravi Karunanayake. It was also a one-time tax of 25% on profit before tax where the profit before tax was exceeding Rs. 2,000mn for the Y/A 2013/14.
Further Minister Basil Rajapaksa stated that the rate of Value Added Tax on Financial Services paid by specified institutions such as banks, finance companies, insurance companies etc would be proposed to be increased to 18% from 15%. This tax should be paid monthly from 01 January 2022 to 31 December 2022. It was specifically mentioned that this tax should not be shifted to the customer. Minister revealed that Rupees 14 billion is expected to be earned through the increase of the VAT tax.
Currently any person (including specified institutions) who are in the supply of financial services as a business are required to pay VAT on Finance services at the rate of 15%.
