Sri Lanka still the lowest tax collector: Eran
Sri Lanka is still a tax heaven for investors and tax payers, said State Minister of Finance, Eran Wickramaratne.
Speaking at the Ceylon Chamber of Commerce hosted seminar on the newly passed ‘Inland Revenue Act’ yesterday he said that the personal tax which is 24% in Sri Lanka is 30% in Bangladesh and 35% in India.
“In countries like Vietnam it is 27.5%, Malaysia, 28% Mexico, 35% Thailand, 35% and South Africa 45%. It similar for the corporate tax structure as well.”
The Minister also said that there were lot of debates and pros and cons considered before the new revenue act was introduced.
He said that new investment will be allowed depreciation of up to 150% (capital allowances).
In the case of the Northern Province, capital allowance of up to 200% will be given.
Information technology companies will be allowed to deduct the equivalent of 35% over the actual salary bill, if they do not claim capital allowances. He also said that the government would do away with the Strategic Development Act.
“We will not abolish tax holidays already given by the Board of Investment,” the minister said.
Finance Minister Mangala Samaraweera, speaking at the debate in Parliament earlier said that Sri Lanka is expecting Rs 45 billion additional tax revenue through the new Inland Revenue Bill
Sulaiman Nishtar, Partner at Ernst and Young said under the new law, a withholding tax of 5 percent will be deducted by banks as a final tax, up from 2.5%.
“Companies will be liable at 5%, but it will not be final tax and will form part of the taxable income.”
Government will also tax foreign currency deposits in the future in the same manner as rupee deposits.