Further In Debt

Withholding tax would be slapped on corporate debt from the first of November, a treasury public notice said.rn

rnSecondary market trading in debt securities is still very limited in Sri Lanka and analysts warn that this may be the final blow to any hopes of a take off in trading.rn

rnWithholding tax makes secondary market transactions complex and burdensome.rn

rnMarket players were taken by surprise when the last budget proposed to bring back withholding taxes for debt instruments, which were removed a few years back following representations from those who wanted to develop Sri Lanka
quote s debt markets.rn

rnGovernment securities escaped the brunt of the blow after the treasury agreed to deduct withholding tax before issuing the instrument in the primary auctions. As a result secondary market trading happens net of withholding tax.rn

rnBut the treasury said the tax would apply to corporate debt that is already issued and not only to new issues.rn

rnThe tax applies to debt instruments of listed