Changing Tax Structure with new Budget

Deputy finance minister Sarath Amunugama said yesterday that Sri Lanka has a complex tax structure which is discouraging savings and the government is expecting a comprehensive tax reform plan in August.

An interim report from a presidential tax commission has recommended a simplified tax structure which is more equitable and is being planned for the medium term, he added.

"The government also proposes in the medium term to bring down excessive tax rates on personal and corporate income as well as banking and financial institutions and do away with ad hoc and unproductive tax concessions offered by the Board of Investment and in terms of income tax laws. Different tax treatments of firms coming under the Board of Investment, the investment promotion agency, and other companies in the country would be reduced. Banks and financial sector firms were also facing very high tax rates, he said.

"The dichotomy between the BOI and non-BOI regimes will be corrected to create a level playing field."

The government was planning to raise the tax take to 17.0 percent of gross domestic product in the medium term with tax reforms.