Nov 10, 2017 (LBO) – Sri Lanka’s Finance Minister Mangala Samaraweera told Parliament Friday that the planned bank levy will be a tax deductible business expense.
2018 budget proposed a special levy for financial institutions to be implemented with effect from 1st April 2018 which will be applicable for 3 years.
Samaraweera yesterday termed this levy as ‘Medamulana tax,’ as it intended at collecting additional revenue to repay foreign debt taken during the Rajapaksa era.
As per the proposal, 2 rupees per 10,000 rupees on cash transactions (0.02%) should be payable by all financial institutions.
“This levy should not be passed on to the customers and the levy financial institutions are paying can be deducted from their income tax.” Samaraweera told Parliament.
Special Assignments Minister Sarath Amunugama, however, said this levy is a consumption tax and can be deducted from income tax if wanted.
Amunugama added that this levy has been introduced in such a way, which will not impact all the business activities of a financial institution.
Finance Minister said the next 3 years will be crucial with debt repayments amounting to almost 7,000 billion rupees.
This includes the repayment of international sovereign bonds which will mature every year amounting to almost 600 billion rupees. He said in 2018 alone, the debt repayment amounts to 1,970 billion rupees.
According to revenue proposals, however, only 20,000 million rupees are expected to collect through this levy next year.
Foreign liability management becomes an immediate priority as the economy is facing the largest ever foreign debt servicing requirements, clustered during 2019-2022.