Tax Administration and Tax Policy Revisions

Excise Department

Introduction of an online license-issuing system. And increase in the Excise License fees.

Introduction of Sri Lanka Standards (SLS) for toddy and all types of locally manufactured liquor.

Encourage investments in new types of liquor products targeting foreign markets.

Make selected locally produced liquor to be available in duty-free shops. Strengthen the tax collection and enforcement in Beedi Industry.

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Inland Revenue Department - Income tax

Tax Payable by Withholding: A special tax return requirement will be introduced for the deduction of 2.5% withholding tax levied on the sale price of any gem sold at an auction conducted by the National Gems and Jewellery Authority.

Income tax on Unit Trusts and Unit Holders: The current tax treatment of Unit Trusts shall continue to apply subject to the mandatory requirements of furnishing information specified by the Commissioner General such as details of income, exempt amounts and withholding tax details to every unit holder before 30th August following the year of assessment

Tax Identification Number (TIN): Submission of a copy of the Certificate of the TIN will be made a mandatory requirement to,

Inland Revenue Department - Value Added Tax:

  • A gazette notification will be issued to implement the increase of VAT rate to 18% (increase from 15%) with effect from 01 January 2024E.
  • The registered persons will be encouraged to use Point of Sale (POS) machines which automates invoicing and sales recording to support VAT collection in supplying goods or services.
  • Elimination of almost all VAT exemptions other than for products relating to Health, Education and a few essential foods. This brings Sri Lanka in line with regional peers including India and Pakistan, in terms of standard VAT rate. Once the resulting VAT collections enable overall tax targets to be met, it will be possibleto phase out other indirect taxes such as the Social Security Contribution levy (SSCL) and rationalise the Special Commodity levy (SCL), which are distortive in nature.

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