COLOMBO: Tax reforms are proposed to be implemented over the immediate and near term to boost the Government tax Revenue. Accordingly, as per the Prime Minister’s office the Value Added Tax (VAT) rate will be increased to 12% from the current rate of 8%. An additional revenue of Rs 91 Bn is estimated for the year 2022 due to this revision. The Gazette notification 2282/26 has been issued notifying the revised rate of VAT.
Further the Telecommunication Levy would also be increased from 11.25% to 15% and Rs 3 Bn is estimated from this revision in the year 2022. The above revisions are expected to be implemented with immediate effect subject to the issuance of Gazette notification and letter by the Telecommunication Regulatory Commission.
In addition to the above, the following amendments are proposed to be implemented with effect from 1st October 2022. A total of Rs 31 bn revenue is estimated to be collected in the current year from the following.
- Mandatory withholding tax deduction from employment income
- Reduction of Personal Income Tax relief from Rs. 3 mn to Rs. 1.8 mn
- Reduction of personal income tax slabs from Rs 3 mn to Rs 1.2 mn
- Personal Income Tax Rate – Highest tax rate to be 32% ( current – 24%)
- Impose Withholding Tax (WHT) on service payments exceeding Rs. 100,000
- Introduce WHT on interest and dividends
- Reintroduce relief for senior citizens on Interest income of Rs 1.5 mn
- Corporate Income tax to be revised
- Standard rate increased from 24% to 30%
- Concessionary rate increased from 14% to 15%
- VAT registration threshold reduced from Rs. 300 Million to Rs. 120 Million
- Removal of VAT Exemption granted for sale of condominium housing units
- Betting & Gaming Levy
- Increase the Annual Levy for carrying on the business of gaming from Rs. 200 Mn to Rs. 500 Mn.
- Increase Annual Levy for betting
- From Rs. 4 Mn to Rs. 5 Mn when it is carried on through agents
- From Rs. 0.6 Mn to Rs. 1 Mn when it is carried on using live telecast facilities
- From Rs. 50,000 to Rs. 75,000 when it is carried on without the use of live telecast facilities
- Increase the rate of the levy on Gross Collection from 10 percent to 15 percent.
The annexure listing out the tax reform proposals are given below
The following proposals will be implemented effective 1st April 2023.
