Mar 23, 2017 (LBO) – Sri Lanka’s proposed Inland Revenue Act is to be drafted in conformity with the announced policy design of capital gains tax, the government said.
Budget 2017 proposed a capital gains tax to be introduced with effect from 1st April 2017 at a rate of 10 percent.
This is considered equitable as it bridges the income gap and assists government initiatives in poverty alleviation, according to the proposal put forward to the cabinet.
The draft Inland Revenue Act has also been revised taking into account comments made by the IMF.
New act seeks to broaden the tax base by removing the excessive tax incentives and expanding the sources of income rules.
It includes new powers and strengthens existing powers of the Inland Revenue department while enhancing taxpayer protections.
Proposed law also seeks to address tax base erosion such as aggressive tax planning while combating tax avoidance by closing gaps in exiting rules.
Even though the government intends to introduce new law from 1st April, it may take sometime as it is yet to be passed through the Attorney General and Parliament.
The draft law received the cabinet nod Tuesday to instruct the legal draftsman to draft the bill which will then be submitted to Attorney General to verify constitutionality.