Sri Lanka is set to introduce a series of tax changes by next month aimed at increasing government revenue, according to a recent report by the International Monetary Fund (IMF). The report, which follows the IMF’s review of its program with Sri Lanka, outlines several key tax reforms.
One of the major changes includes the imposition of a value-added tax (VAT) on digital services, while existing income tax exemptions on service exports will be removed. Additionally, the social security levy currently charged on sales will be replaced by VAT.
Corporate income tax rates for alcohol, tobacco, and gaming companies are slated to rise from 40% to 45%. Most of these new taxes are expected to take effect in January 2025.
Furthermore, a tax on the imputed rents of owner-occupied and vacant houses is planned to commence in April 2025.
The IMF report also notes that the planned tax measures, alongside the resumption of vehicle imports, are projected to generate annual revenue equivalent to 1.5% of the country’s GDP.
Source: imf.org
