Sri Lanka Unveils New Budget

November 8, 2012 Taxation in Sri Lanaka

Mahinda RajapakseCOLOMBO – Next year Sri Lanka will try to boost the collection of taxes and allocate greater funding to social development projects.

During the presentation of the national budget in Colombo on November 8th, the President of Sri Lanka Mahinda Rajapakse said that the plan indicated in the budget to increase the rates of some taxes next year will help the government to reduce the budget deficit to the lowest level in more than thirty years, and will allow Sri Lanka to increase the funds dedicated to the development of social and economic infrastructures.

During his speech, the President announced a new tax on buildings and properties held by supermarkets and other high end retail businesses with annual incomes exceeding LKR 500 million per quarter.

The import duties on foreign liquors and selected luxury food items will also be raised, alongside hikes to airport tax and online visa tax.

Amongst other measures intended to boost national revenue, Mahinda Rajapakse indicated that Sri Lankan nationals who are currently working overseas will be offered low interest loans to buy housing in the country, while foreigners will be banned from buying property for tourism development in Sri Lanka.

In an effort to boost the livelihoods of residents of the country, in the budget the government also outlined increases to the living allowances granted to pensioners, rises of the financial support offered to journalist and artists, and hikes to the salaries of public sector workers.

The increased revenues collected by the government is intended to expand the funding for the health sector and projects intended to improve housing levels in the country.

As a means of developing confidence in the national economy, businesses operating in Sri Lanka will be offered a three year tax holiday as an incentive for publicly floating at least 20 percent of their equity on the Colombo Stock Exchange.

Photo by Utenriksdept