May 15, 2017 (LBO) – Sri Lanka’s Finance minister announced some features of the new Inland Revenue Act which include income tax exemptions for IT exports, waste management, entrepôt trade and other sectors while imposing capital gains on real estate.
He said that an earlier government initiated 10 percent tax on capital gains through equity trading, would be dropped.
“Capital gains on land and houses acquired within a period of 10 years will attract a 10 percent tax and lands sold after ten years will not be taxed,” Ravi Karunanayake, Finance minister told reporters on Sunday.
The new Inland Revenue Act is now being drafted and will be presented to parliament soon.
“Profits from solid waste management, organic fertilizer, agriculture, poultry, dairy, export of gold, gem and jewellery will be exempt from income tax,” Karunanayake said.
“Export of services by individuals will also be exempt.”
Speaking about the individual income tax structure he said that the tax-free income will remain at 500,000 rupees a year while an employee earning a monthly salary of 100,000 will not have to pay tax.
“An employee earning a monthly salary of 100,000 or an annual income of 1.2 million rupees will not have to pay tax,” he said.
Those under the PAYE schemes will get a tax credit for 700,000 rupees above their 500,000 rupee tax free allowance for a year.
The highest tax rate has been raised from 15 percent to 24 percent.