Sri Lanka

New tax proposals made for income tax and approved by the Cabinet of Ministers will be implemented, subject to formal amendments to the Inland Revenue Act No. 24 of 2017.

The proposed amendments are set out below:

• Income from agro farming without subjecting such produce to any process shall be exempted from income tax with effect from 1 April 2019.
• Amounts received by any religious institution by way of grants and donations shall be exempted from income tax with effect from 1 January 2020.
• Income earned from any service rendered to any person to be utilised outside Sri Lanka if the payments for such services are received in foreign currency through a bank shall be exempted from income tax with effect from 1 January 2020.
• Income from information technology and enabling services shall be exempted from income tax with effect from 1 January 2020.
• Any income earned by any non-resident person on sovereign bonds denominated in foreign or local currency is exempt from income tax with effect from 1 April 2018.
• Interest or discount paid or allowed to any person on sovereign bonds denominated in foreign currency is exempt from income tax with effect from 1 April 2018.
• Amounts derived by any non-resident person from laboratory services or standards certification services will be exempt from income tax with effect from 1 January 2020.   
• Dividends paid by a resident company to any non-resident person will be exempt from income tax with effect from 1 January 2020.
• Interest paid on loans obtained from any person outside Sri Lanka is exempt from income tax with effect from 1 April 2018.
• Interest income earned on moneys lying to one's credit in foreign currency accounts approved by the Central Bank of Sri Lanka will be exempted from income tax with effect from 1 January 2020.
• Corporate income tax (CIT) rates will be revised with effect from 1 January 2020 as follows:
  • Small and Medium enterprises Exports, tourism, education, healthcare                               Construction and agro processing dividends received from a resident company 14%
  • Manufacturing                                                                                                         8%
  • Liquor, Tobacco, betting and gaming                                                                     28%
  • Trading banking finance, insurance etc                                                                 24%