VAT unchanged for businesses with turnover of over Rs. 25 mn per month

VAT unchanged for businesses with turnover of over Rs. 25 mn per month

VAT unchanged for businesses with turnover of over Rs. 25 mn per month

Written by Zulfick Farzan

17 Nov, 2020 | 5:42 pm

Colombo (News 1st);  The Government proposed 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.

Prime Minister Mahinda Rajapaksa delivering the 2021 Budget Speech proposed to improve the efficiency of tax collection through the introduction of an online – managed single Special Goods and Service Tax in place of the various goods and service taxes and levies, imposed under multiple laws and institutions on alcohol, cigarettes, Telecommunication, betting and gaming and vehicles, which accounts for 50 percent of the income from taxes
and levies.

It is expected through this reform to direct Institutions under special legislation such as the Excise Ordinance to have a more focused regulatory engagement in facilitating the government to secure its revenues otherwise lost through sale of illicit alcohol and cigarettes.

Tax laws will be amended where it will be mandatory for all Companies to file their taxes only on an “E-Filing” system with effect from 01 April 2021, and the use of the Tax Identification Number (TIN) in all tax and tax related transactions.

It is also proposed to establish a special tax appeals court to resolve tax appeals.

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, said the Prime Minister.

Individuals and companies engaged in farming, including agriculture, fisheries and livestock farming will be exempted from taxes in the next 5 years.

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.

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