Sri Lanka Eyes Capital Gains Tax
June 29, 2016 Taxation in Sri Lanaka
COLOMBO – Sri Lanka’s stock market is dropping following indications that the government will enact a capital gains tax.
Early this week at a forum of Foreign Correspondents’ Association the Minister of Development of Sri Lanka Patali Champika Ranawaka claimed that the national government will soon impose a tax on gains from land transactions and sales of equities.
The new tax is aimed to raise extra tax revenues, in order to shore up government funds, while also satisfying part of the International Monetary Fund’s conditions for a loan of USD 1.5 billion.
The Minister stated that the exact details of the tax are not yet know, but he did say that “there will definitely be a capital gains tax on land transactions plus the stock exchange.”
This is not the first time that Sri Lanka has had a tax on capital gains from the sale of land, as up to 2002 a tax of 25 percent of imposed.
The tax on gains from the sale of equity is also not new, and was previously suggested by the Prime Minister Ranil Wickremesinghe in March.
Since the original announcement by the Prime Minister, and the more recent words of the Minister of Development, the stock market has been in decline and there has been a marked withdrawal of foreign investors.
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