Income Tax (Amendments to the Inland Revenue Act, No.24 of 2017)
Exemptions
- The Earnings by any non-resident person on any sovereign bond denominated in local or foreign currency will be exempted.
- Interest income earned by any resident person on sovereign bonds denominated in foreign currency, including Sri Lanka Development Bonds (SLDB) will be exempted.
- Interest income earned by any person on NRFC and RFC accounts will be exempted for 5 years
- Interest income, up to Rs. 5,000/- per month, earned by children of less than 18 years of age, in relation to any deposit account maintained in a financial institution, will be exempted.
- Interest paid to any person outside Sri Lanka on loans granted by such person to any person in Sri Lanka will be exempted. This exemption will not be applicable to loans granted by a Non-resident company to its Holding company or a Subsidiary Company in Sri Lanka
Withholding Tax (WHT)
- Royalty payments not exceeding Rs. 50,000 per month, subject to Rs.500,000/- for each year of assessment, made to any resident individual will be exempted from WHT.
- Rent payments not exceeding Rs. 50,000 per month, subject to Rs.500,000/- for each year of assessment, made to any resident individual will be exempted from WHT.
Incentives for Information Technology
- The requirement of minimum 50 employees in order to qualify for the additional deduction equal to 35% of the salary cost when calculating the income from the business of IT will be removed.
Investment Incentives for Existing Businesses
- Tax concessions by way of accelerated depreciation will be granted instead of regular depreciation for the new investments made by existing businesses.
Definition of Gross Income
- The “gross income” referred to in item (iii) of the subparagraph (3) of paragraph 4 of First Schedule will be the total income excluding the investment income. The concessionary tax rate of 14% will be applied only on the income from an activity eligible for the concessionary tax rate. The investment income will be liable for tax at 28%.
Income Tax amendments will be implemented with effect from the year of assessment commencing from April 1, 2019.
