Nov 17, 2020 (LBO) – The Prime Minister and Minister of Finance Mahinda Rajapaksa presented the Budget for the Year 2021 to Parliament today.
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| Budget Speech 2021 concluded. DOWNLOAD full speech. |
| Govt proposes to increase freshwater fish production to 250,000 metric tons by releasing 50 million fingerlings annually to tanks and freshwater reservoirs with an allocation of Rs. 150 million |
| Govt proposes to establish 5 fully-fledged plug and play Techno Parks in Galle, Kurunegala, Anuradhapura, Kandy and Batticaloa districts. A fund allocation Rs.10,000 million to develop these Techno Parks as eco-friendly new cities connected to the expressway network |
| Earnings from both domestic and foreign sources by those engaged in businesses in Information Technology and enabling services and also their earnings when made while being resident or non-resident will also be exempted from income taxes |
| Individuals and companies engaged in farming, including agriculture, fisheries and livestock farming will be exempted from taxes in the next 5 years |
| Personal Income Tax will apply on earnings from employment, rent, interest, dividends or any other source only if it exceeds Rs.250, 000 per month. Withholding tax on rent, interest or dividends and the PAYE tax (Pay As You Earn) and taxes on interest have been abolished |
| Retirement age of men and women increased to 60 years. Under current laws men retire at 55 and women 54 |
| Govt proposes to maintain the VAT unchanged at 8 percent, for businesses with a turnover of more than Rs. 25 million per month engaged in the import and manufacture of goods or provision of services, except in the case of banking, financial and insurance sectors |
| Banking laws will be amended allowing commercial banks to carry out activities of the investment banks in order to restructure the whole financial system. Financial sector consolidation will be strengthened through mergers |
| Single use polythene and plastic to be banned from Jan 2021 |
| State Owned Enterprises will not be privatized. Steps will be taken to make them more profitable |
| Banks and Financial Institutions to be strengthened through special government initiatives |
| Govt to allocate Rs. 20,000 million for judicial services, with special focus on expanding the judicial workforce and infrastructure |
| Companies recycling construction waste will get a 10-year tax break and concessions to import machinery |
| Govt to simplify approvals, certifications and permits, and improve access to raw materials such as sand and imported inputs for housing will be exempt from import taxes |
| Housing in Colombo’s suburbs and main cities to be improved - 25 year loan with an interest rate of 6.25 percent to be granted for applicants of these state housing project |
| Import tax to be reduced on motor vehicle spare parts |
| Import levies on the motor vehicle industry to be provided tax relief |
| Dividend tax of foreign companies will be exempted for 3 years if they wish to expand their businesses or investing in the securities market (CSE/SL sovereign bonds) |
| Capital Gains Tax to be simplified. Tax will be charged over the property sales price or government assessor’s value, whichever is higher |
| Tax consultants, audit firms, etc. who prepare false tax files, returns and statements will be penalized and disqualified from such services. New provisions will be introduced |
| 70 percent of Sri Lanka's energy supply to be sourced from renewable energy sources by 2023 |
| Three year programme to develope road infrastructure to be carried out in the all 25 districts and railway network including Colombo and Kelani Valley to be expanded, Rs. 1300 million investment |
| Repayment and re-financing loan schemes provided by the CBSL to tourism sector extended till Sept 2021 |
| 300 megawatt coal unit and 600 mw LNG power plants to be added to the Lakvijaya power plant |
| Rs. 150 million allocated for local fisheries development |
| e-Filing scheme will be mandatory for all companies from 01.04.2021. Tax law will also be amended to use Tax Identification Number (TIN) for paying taxes |
| Marine drive in Colombo to be extended up to Moratuwa |
| Estate workers wages to be increased up to Rs. 1000 from January 2021 |
| Sri Lanka to importing milk cows and cultivating cattle feed locally. A loan up to Rs. 500,000 proposed for development of dairy farming |
| Govt propose to increase milk production in the country and reduce import costs |
| Govt to allocates Rs. 1000 million USD 1,000 million for national Sports economy. Also proposes to increase women participation in sport. |
| 8 percent VAT will be maintained for businesses with over Rs25mn monthly business turnover that are involved in goods imports, manufacturing, and services |
| Youth engaged in technical skills courses can apply for a Rs500,000 loan to set up a business |
| Companies that will be listed on the CSE before 31.12.2021 will receive a 50 percent income tax relief and 14 percent income tax for the next 3 years |
| Companies employing more than 50 to be charged a tax of 0.5 percent of revenue to fund a Covid unemployment insurance scheme |
| New investment zone to be introduced for local and foreign investors |
| Allocation of investment of Rs. 15,000 million for Telecom Development Fund between 2020-2022 for mobile and fixed broadband services |
| Govt allocates Rs. 8 billion to develop Tech and related industries, with necessary infrastructure and to tighten data protection laws, cybersecurity and IP rights |
| Remove capital gains taxes and reduce stamp duty to 0.75 percent to encourage expatriates to invest in luxury apartments and homes listed on the Real Estate Investment Trust regulated by the SEC |
| Retired, injured or deceased military to get 750 million rupee fund for housing, health, education and entrepreneurship |
| Several new measures will be introduced for Sri Lankans living abroad to purchase luxury apartments |
| Income that will be generated through agriculture and fisheries sectors exempted from income tax for next 5 years |
| New loan scheme for Samurdhi beneficiaries with 7 percent interest |
| Sri Lanka to introduce a separate common tax for goods and services. This will contribute over 50 percent to the national tax revenue (These include liquor, cigarette, telephone services, betting, vehicles) |
| Special Court of Appeal to hear public complaints on tax and changes to the Inland Revenue Department to encourage tax auditing are proposed |
| Sri Lanka to increase social welfare measures to alleviate poverty |
| 65 percent of foreign loans to be utilized for development initiatives with the exception of technical developments. |
| Sri Lanka's National debt should be reduced to 70 per cent |
| Sri Lanka will be put on a path of industrialization focusing on agriculture and services using new technology and moving away from imports |
| Prime Minister and Minister of Finance Mahinda Rajapaksa commences Budget speech for 2021 in Parliament |