Sri Lanka’s tax regime will be maintained stable at the present level in the next five years without undergoing any changes, Presidential Secretary Dr. P.B. Jayasundara has vowed sternly.
Presidential Secretary Dr. P.B. Jayasundara has strictly assured that Sri Lanka’s tax regime will not undergo any changes for the next five years and that Value Added Tax (VAT) will remain at 8 per cent.
He gave this assurance when he addressed an economic conference in Colombo on Tuesday (23).
“We’re assuring that the tax regime which we have scheduled will not change. Next five years, VAT will be at 8%. Income tax is whatever rate we’ve gazetted. No other taxes will be brought. Custom base taxes will be rationalised. The country needs much more efficient, transparent, compliance, friendly tax regimes and that is given," dr. Jayasundera said.
The revenue, if you want to raise the turnovers, raise the volume, raise the GDP that is what it is all about. So the Treasury Secretary is not allowed to make any more changes in taxes, he added. However the Cabinet has given approval for a slew of tax changes introduced in 2019 and also proposed in Budget 2021 to be implemented ahead of the commencement of the new tax year, a senior minister said recently.
Cabinet Spokesman Minister Keheliya Rambukwella told the weekly Cabinet briefing that Cabinet had approved necessary changes to the Inland Revenue Act No. 24 of 2017 and the Value Added Tax No. 14 of 2002 in order to implement tax reforms introduced by the government shortly.
“Approval has been given by the Attorney General to these amendments. The Cabinet approved the paper presented by Prime Minister Mahinda Rajapaksa as the Finance Minister to publish the necessary regulations as a gazette and submit the same to parliament,” he said.
Last month, Treasury Secretary S.R. Attygalle told reporters that the Finance Ministry was working to legislate tax changes before the new tax year kicks off at the start of April. These include income and corporate tax changes, plus a new goods and services tax proposed in Budget 2021.
Legislation was also formulated to charge 1% tax on any previously undeclared foreign exchange brought into Sri Lanka, which was a proposal announced by Prime Minister Mahinda Rajapaksa in Parliament during the Budget reading last November.
At the time, he said legal provisions would be given to entrepreneurs to return such forex funds for investment in Sri Lanka and they would be liable to a tax of only 1%, which sparked protest from opposition parties that accused the government of encouraging money laundering.
The government has said the tax changes were aimed at simplifying Sri Lanka’s tax system so public revenue could be increased while establishing a stable policy environment for the private sector.