Note that the following proposals have been made but are yet to be enacted into law by Parliament.
Effective 1 April 2017, the corporate income tax (CIT) rates will be revised to a three tier structure consisting of a lower rate of 14%, standard rate of 28%, and a higher rate of 40%.
The lower rate of 14% will be applicable on the profits and income of small and medium enterprises (SMEs) where the turnover does not exceed 500 million Sri Lankan rupees (LKR), export of goods or services, agriculture, and education.
The higher rate of 40% will be applicable on the profits and income of betting and gaming, liquor, and tobacco.
The standard rate of 28% will be applicable on the profits and income of all the other sectors.
The rates of capital allowances will be revised as follows:
- 20% for plant, machinery, or equipment for a period of five years.
- 5% for qualified building for a period of 20 years.
Withholding tax (WHT) on specified fees will be reintroduced. Where such fees exceed LKR 50,000 per month, WHT will be deductible at 5%.
WHT on dividends distributed by resident companies will be increased from 10% to 14%, effective from 1 April 2017.