Sri Lankan government passes IMF-backed tax bill
22 September 2019
The Sri Lankan parliament passed an amended Inland Revenue Bill on September 7, effectively implementing the dictates of the International Monetary Fund (IMF). The vote, originally scheduled for August 25, was delayed after the government, fearing opposition from the working class, was forced to make various cosmetic changes.
The new version will become law on October 1 and go into force next April. While it incorporates more than 100 amendments, some members of parliament complained they were not given all the proposed changes. The purpose of the legislation is to extract direct taxes from workers, “self-employed” and small traders, while providing concessionary taxes for big business.
Under the previous version of the bill , non-resident s’ and residents ’ monthly income of 50,000 rupees ( $US328 ) was to be taxed at 4 percent , increasing up to 24 percent for those with a 250,000-rupee monthly income . The first threshold of the tax now has been raised to 100,000 rupees . M onthly interest in come of 125,000 rupees from pensioners ’ savings will be taxed. The previous propose d threshold was 100,000 rupees.
While t hese two changes were made to deflect opposition from workers , professionals and pensioners , o ther taxes impact ing on broader layers of the population remain. Pension funds above a lump sum of 2 million rupees , for example, will be subjected to taxes of between 5 to 10 percent , and taxes are imposed on those involved in drama, cinema and literature.
A low tax rate of 14 percent will be enjoyed by industries involved in agriculture, tourism, information technology and education and exports. Taxes on other business will be just 28 percent. This compares…