Jan 09, Colombo: Sri Lanka's Cabinet of Ministers, taking into consideration the requests made by different parties, has approved amendments to the Inland Revenue Act implemented in 2017.
A proposal made by Minister of Finance & Mass Media Mangala Samaraweera to amend the Inland Revenue Act, No.24 of 2017, to exempt the Withholding Tax (WHT) imposed on the Interest Income of several types of accounts has been approved by the cabinet at its meeting on Monday.
Accordingly, children's savings, Earnings from the Government Securities, Interest on loans of non-residents, Royalty, Leasing of Air crafts taxes will be exempted from taxes.
According to the Finance Minister, following is a summary of Cabinet approved amendments to the Inland Revenue Act No.24 of 2017:
1. WHT on earnings from Gov. Securities exempt of any gain including interest, discount or capital gain earned by non-residents of Sovereign bonds in local/foreign currency, issued by/on behalf of Government
2. WHT on Interest Income of children's accounts - Exemption of interest earned by children under 18 years of age, on deposits maintained in any financial institution from Income tax.
3. WHT on interest on loans of non-residents - exempted of interest paid to any person outside Sri Lanka on loans granted to the Government of Sri Lanka by such person.
4. WHT on Royalty - Exemption of Royalty payment not exceeding Rs.50,000 per month, subject to a maximum of Rs.500,000 per year of assessment.
5. WHT on Interest Income - Exemption of Interest Income up to Rs.50,000 per month subject to Rs.500,00 per annum on any savings & fixed deposits maintained by individuals including joint deposits of individuals in any financial institution.
6. WHT on Interest Income - Increased of exemption applicable on the interest income of senior citizens from Rs.150,000 per year to Rs. 300,000 per year.
7. WHT on Interest Income - Interest Income exempted from WHT shall not be subjected to income tax as well. Amounts in excess of all such exemptions shall be liable for WHT at a rate of 5% with effect from 1st Dec 2018, which will be the final tax.
8. Interest Income of NRFC & RFC - Exemption of interest income payable on or after 15th NOV 2018, to any person holding NRFC & RFC accounts in any commercial bank with the approval of Central Bank of Sri Lanka.
9. Income Tax on Foreign Remittances - Exemption from income tax of foreign earnings remitted to Sri Lanka through a bank on or after 15th Nov 2018.
10. WHT on Rent - Reduction of WHT applicable on the payment of rent from 10% to 5% of the rent.
11. Income tax rate on SM Enterprises of Individuals - Maximum 14% income tax rate to the income of individuals falling within the category of SM Enterprise, with effect from 1st April 2019.