Sri Lanka: Tax and customs duties proposals in 2022 interim budget

Budget proposals for the remaining months of 2022 that include tax measures

Budget proposals for the remaining months of 2022 that include tax measures

The Minister of Finance recently presented budget proposals for the remaining months of 2022 that include tax measures. 

Tax proposals

Regarding direct taxes, the budget proposes:

  • An increase in the standard corporate income tax rate to 30% (from 24%)—effective 1 October 2022
  • An increase in the concessionary income tax rate to 15% (from 14%)—effective 1 October 2022
  • Removal of various tax holidays granted under the Inland Revenue (Amendment) Act No.10 of 2021—effective 1 April 2023
  • Imposition of income tax on dividend payment by a resident company to a non-resident person—effective 1 April 2023
  • Removal of additional 100% deduction applicable for 2022/23 tax year granted for marketing and communication expenses—effective 1 April 2023

Indirect tax proposals include:

  • Increase in the rate of value added tax (VAT) on the import and/or supply of goods or supply of services to 15% (from 12%)—effective 1 September 2022
  • Reduction in the VAT threshold to LKR 120 mn per annum (from LKR 300 mn per annum or LKR 75 mn per quarter)—effective 1 October 2022
  • Removal of VAT exemption on condominiums—effective 1 October 2022

Customs duties proposals

Customs duties proposals include:

  • Offering a 50% import duty concession on import of advanced new technology equipment/accessories for food packaging
  • Providing concessions for imported accessories or parts required in the manufacture of electric bicycles locally with more than 50% value added

Read an August 2022 report [PDF 1.2 MB] prepared by the KPMG member firm in Sri Lanka


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