COLOMBO: Sri Lanka’s new Inland Revenue Act seeks to introduce a three-tier simplified tax structure for corporate entities. Higher rate of 40 percent is to be applied for liquor, tobacco and betting & gaming-related businesses. Standard rate of 28 percent will be applicable to banking, finance and insurance businesses as well as manufacturers, traders and any other areas not specified.
Fourteen percent concessionary rate which is to be capped at 50 percent of the standard rate will be related to SMEs, export of goods and services, local IT industry and manufacturing furniture. Concessionary rate will also be applicable to education, tourism, fisheries, plantation, renewable energy, freight forwarding, employees’ trust funds, provident or pension funds, termination funds and charitable institutions. Corporate tax exemptions will be provided for export of IT/ BPO services and export of gold, gem, jewellery as well as instances where relocation of international head quarters.
Exemptions will also be applicable to earnings from international trading platform, organic fertilizer production, solid waste management, export of services by individuals, agriculture, poultry, and dairy industries. Middle income housing where value per housing unit is not more than 5 million rupees will get exempted from corporate tax. Apart from those hub activities like entrepot, international logistics, multi country consolidation will also be considered as exempted from corporate tax. Cabinet approval has been granted to the draft act which is to be presented to the Parliament soon subject to verification of constitutionality of the provisions in the draft bill from the Attorney General.
