| Year |
Policy Changes |
| 1941 |
Excess Profits Duty came into operation |
|
1948 |
Profits Tax was introduced replacing Excess Profits Duty |
|
1950 |
Signed the first Double Tax Relief Treaty by Ceylon with UK |
|
1958 |
Kaldor Commission Proposals
- Taxation of Capital gains
- Imposing Wealth Tax
- Expenditure Tax
- Gifts Tax
Named the Department as Department of Inland Revenue |
|
1961 |
Introduction of surcharge on income tax,
National Development Tax, Rice Subsidy Tax,
Surtax, a Tax on Registration of Business and Professions and a Sales Tax (Last for 2 days only) |
|
1963 |
Establishment of first Regional Office in Jaffna.
Introduction of Business Turnover Tax under Finance Act 11 of 1963. |
|
1964 |
The first tax amnesty |
|
1971 |
Compulsory Savings Levy came into operation
PAYE scheme was introduced.
Capital Levy was introduced |
|
1972 |
Introduction of the Self Assessment Scheme. |
|
1974 |
The Department of Inland Revenue was re-structured.
Inland Revenue Service was established |
|
1979 |
Enactment of fist Inland Revenue Ac t,No 28 of 1979
Introduced current year basis taxation (79/80) |
|
1983 |
Introduction of Rehabilitation Levy |
|
1985 |
Abolished Estate Duty and Gifts Tax |
|
1986 |
Introduction of Withholding Tax on interest |
|
1988 |
Implementation of the "Imputation System" of Company Taxation.
Imposition of Betting and Gaming Levy. |
|
1991 |
Devolution of Turnover Tax on whole sale and retail to Provincial Councils. |
|
1992 |
Introduction of Withholding Tax on Specified Fees.
Commenced Automation at the Department of Inland Revenue
Introduce National Security Levy (NSL) |
|
1998 |
Introduction of Goods and Services Tax (in place of Turnover Tax) from 01.01.1998 - threshold for registration Rs. 500,000 per Quarter or 1,800,000 per annum at 12.5% |
|
2000 |
Inland Revenue Act No.38 of 2000 |
|
2002 |
- Introduction of Value Added Tax –(by abolishing Goods and Services Tax and National Securities Levy) – threshold for registration Rs. 500,000 per Quarter or 1,800,000 per annum and charged under 3 types of ratio – Zero, 10% and 20% goods specified in the schedules
- Abolished Stamp Duty and introduced Debits Tax
|
|
2003 |
VAT on financial Services was introduced on the book profit of banks and financial institutions. |
|
2004 |
- Economic Service Charge was introduced by finance Act No 11 of 2004
- Standard VAT ratio changed to 15% from 01.01.2004 and basic rate was Imposed on several essential goods at 5% with effect from 19.11.2004
|
|
2005 |
- Introduced Share Transaction Levy at the rate of 0.2% of tax payable by every buyer and seller.
- Introduced Social Responsibility Levy at 0.25% of Tax payable
- NGO Tax – 3% of amount received at 30%
- Luxury VAT ratio changed twice. From 01.01.2005 to 01.08.2005 18% and From 02.08.2005 – 20%
- Issuance of privilege cards to good tax payers was commenced from 02.11.2005
|
|
2006 |
- Inland Revenue Act No.10 of 2006
- Economic Service Charge Act No.13 of 2006 – with effect from the quarter commencing on April 1, 2006 ESC imposed under this Act
- SRL was increased to 1% w .e .f. 2006/07
- Two new principles incorporated into income tax Act for transfer pricing and thin capitalization
- Stamp Duty was reintroduced
|
|
2007 |
- 15% of deemed dividend tax was imposed on Companies which had distributed the dividend less than 25% of its distributable profit
- 10% of partnership tax imposed on partnerships which have divisible Profit more than Rs.600,000
- Allowable input tax credit for VAT for any taxable period was restricted to 85%of output declared from 01.01.2007
- VAT withholding Tax introduced - 1/3rd of VAT payable to any contractor or supplier by any Government agencies
- Introduction of Optional VAT whose value of supply was between 1.8Million and 2.5Million per annun.
|
|
2008 |
SRL ratio was increased to 1.5% from 01.04.2008 and withdrawn it on Personal income tax |
|
2009 |
- Introduction of Nation Building Tax (NBT) – Rate 1% from 01.02.2009 and from 01.05.2009 increased to 3%
- Standard VAT ratio reduced to 12% and basic rate was removed
- Registration limit for VAT was increased to Rs.650,000 per quarter or Rs.2.5 million per year
- Optional VAT limit for registration was increased to Rs.3 Million
|
|
2011 |
- Tax appeal Commission was formed commencing from 01.04.2011
- Individual tax free allowance increased to Rs. 500,000
- Introduction of SVAT scheme w.e.f 01.04.2011
- Rate of share Transaction Levy was increased to 0.3% w.e.f.01.01.2011
- 20% of VAT Rate was reduced to 12%
w.e.f 23.11.2011 and VAT
- On financial rate also reduced to 12% from 01.01.2011
- Restriction of 85% of output for claiming input VAT has been removed
- NBT rate was reduced to 2% and extended to charge on wholesale and Retail businesses
- Threshold for ESC registration was increased to Rs.25 Million per quarter
- Abolition of Debits Tax from 01.04.2011
- Abolition of Withholding Tax on Specified Fees, and Commercial Rents (01.04.2011)
- Abolition of VAT Advance Payments (January 1,2011)
- Abolition of Social Responsibility Levy (SRL) (01.04.2011 in relation to income tax)
- Abolition of Regional Infrastructures Development Levy (RIDL)(January 1, 2011)
- Abolition of Turnover Tax (TT) collected by the Provincial Councils (01.01.2011)
|
| 2012 |
- Threshold on ESC was increased to Rs. 50M per quarter and made liable to who have no taxable income
- Betting and gaming levy rate was increased and 5% levy on gross collection was introduced with a requirement of registration
|
| 2013 |
- Registration Threshold on Value added Tax and Nation Building Tax was increased to Rs. 12 million per annum
- Introduction of VAT on wholesale and retail trade, and liable threshold for registration was not less than Rs.500Mn (including exempt supplies) for any consecutive 3 months in an year
- The threshold in relation to partnership tax was increased to Rs.1000,000
|
|
2014 |
- Maximum rate of income tax applicable on employment income of Qualified professionals 16%
- Liable threshold for registration of wholesale and retail trade reduced to Rs.250 Million
|
| 2015 |
- Threshold on Value added Tax and Nation Building Tax was increased to Rs. 15 million per annum and Rate of VAT reduced to 11%
- Liable threshold for registration of wholesale and retail business reduced to Rs.100 Million
- Fixed qualifying payment for employees was increased up to Rs. 250,000
- Maximum income tax rate applicable to employment income for every employee was limited to 16%
- Annual levy payable under the Betting and Gaming Levy Act increased to 10%
- Introduction of Casino entry fee of US$100 per person
- Imposition of Excise (Special Provision) Import or Manufacture of Liquor, Cigarettes and Custom Duty on Motor Vehicles in lieu of VAT and NBT
- Super Gain Tax was introduced as one off payment, for any individual, company or group of company who has earned profits over Rs. 2,000 million in the tax year 2013/2014 will be liable to pay 25% of their profit.
|
| 2016 |
Value Added Tax
- Made mandatory to submit Input & Output VAT Schedules along with the Return
Other
- Introduced e-Filing of Returns
|
|
2017 |
- Inland Revenue Act No.24 of 2017
|
| 2018 |
Income Tax
- Implement the New Inland Revenue Act with effect from April 1, 2018.
Inland Revenue Act, No. 24 of 2017
- Restructuring the Tax Statute
- Reclassification of Income Sources
- Reintroduce of WHT
- Reintroduce of CGT
- Requirement of Statement of Estimated Income
- Introduction of criminal proceedings for Non-Compliers
- Charging interest on default
- Unilateral foreign tax credit
Value Added Tax
- Introduction of Tourist VAT Refund System
|
| 2019 |
Nation Building Tax
- Abolition of Nation Building Tax with effect from December 1, 2019
Value Added Tax
- Stranded VAT Rate reduced to 8% with effect from December 1, 2019
- Exemption of the sale of condominium housing units from VAT with effect from December 1, 2019
- Introduction VAT Refund to Tourist Board Approved Hotels subject to conditions
|
| 2020 |
Income Tax
- Changed the personal relief for resident / non – resident but citizen of Sri Lanka as Rs. 3,000,000/-
- Revision of progressive tax rate and tax slabs of Individual
- Compulsory PAYE deduction is removed & Introduction of Advanced Personal Income Tax (APIT) on consent in lieu of PAYE
- Introduction of Advanced Income Tax (AIT) in lieu of WHT for the local payments
- Reintroduction of Partnership Tax @ 6% removal of mandatory WHT from partnership
Value Added Tax
- Tax threshold for registration increased to Rs. 75 Mn per Quarter or Rs. 300 Mn per annum with effect from 01.01.2020 and voluntary VAT registration is allowed.
- Exemption of information technology and enabling Services as prescribed from VAT with effect from January1,2020
Economic Service Charge
- Abolition of Economic Service Charge with effect from January 1, 2020
Debt Repayment Levy (DRL)
- Abolition of Debt Repayment Levy with effect from January 1,2022
|
| 2021 |
Income Tax
- Compulsory to file the Tax Returns electronically through the use of a computer system or mobile electronic device by a company which is incorporated in or outside Sri Lanka or a public corporation
- Implemented Punitive provision for fraudulently prepared or certified documents
Value Added Tax
- VAT rate on the financial services increased up to 18% with effect from 01.01.2022
Other
Finance Act, No 18 of 2021
- To enable persons to voluntarily disclose undisclosed taxable supplies, Income and Assets required to be discloses under certain laws
- To grant certain concessions to persons who had already disclosed taxable supplies, income and assets under specified laws;
|
| 2022 |
Income Tax
- Revision of tax rates for Trusts, Companies Unit Trusts and Mutual Funds with effect from 01.10.2022
- Removal of certain exemptions with effect from 01.10.2022
Value Added Tax
- Standard VAT rate varies during the year
8% - from 01.12.2021 up to 31.05.2022
12% - from 01.06.2022 up to 31.08.2022
15% - from 01.09.2022
- Supply of Financial Services
18% - from 01.01.2022
- Registration threshold
Decrease of registration threshold from of Rs. 75,000,000 per taxable period or Rs. 300,000,000 per annum to Rs. 20,000,000 per taxable period or Rs. 80,000,000 per annum with effect from October 01, 2022
- Removal of exemption
Exemption granted on supply of condominium residential accommodation by any person will be terminated and made liable for VAT with effect from January 01, 2023.
Social Security Contribution Levy
- Implementation of Social Security Contribution Levy with effect from October 01, 2022 at the rate of 2.5% on;
- Imports any article
- Carries on the business of manufacture of any article
- Carries on the business of providing a service of any description; or
- Carries on the business of wholesale or retail sale of any article including importation and sale of such article other than a sale by the manufacturer of that article being a manufacturer
Surcharge Tax
- Surcharge Tax has been imposed on;
- any individual, partnership of whose/ which taxable income of the year of assessment 2020/2021 exceeds Rupees two thousand million (2,000Mn);
- any company
- If the taxable income of such company individually, exceeds Rupees two thousand million (2,000Mn) for the year of assessment 2020/2021, or;
- every company of a group of companies, of which aggregate of the taxable income of all subsidiaries and the holding company in that group of companies for the year of assessment 2020/2021 exceeds Rupees two thousand million (2,000Mn)
Shall pay 25% on the taxable income
Casino Gaming Business
- Commissioner General has been appointed as the “Authorized Officer” in administering the Licenses for casino gaming business.
- License Fee
- for initial license for a period of 5 years or part thereof Rs. 500,000,000
- for renewal of a License for a period of 5 years or part thereof Rs. 500,000,000
- for multiple periods of 5 years (maximum 20 years) Rs. 500,000,000 for each 5 year period or part thereof, which should be paid upfront
|
| 2023 |
Income Tax
- Changed the personal relief for resident / non – resident but citizen of Sri Lanka as Rs. 1,200,000/- with effect from 01.01.2023
- Revision of progressive tax rate and tax slabs of Individual with effect from 01.01.2023
- Increased the maximum rate from 18% to 36% for Individuals
- Deduction of Advanced Personal Income Tax (APIT) without a consent from employees who earn over Rs. 100,000/- income from cash and non-cash benefits has been made mandatory with effect from January 01, 2023
- Applicable Rate for the Dividend is 15% for all resident & Non- resident persons for every Dividend received with effect from 01.01.2023
- Deduction of Withholding Tax (WHT), Advance Income Tax (AIT) and Advanced Personal Income Tax (APIT) made mandatory with effect from January 01, 2023
- Removal of certain exemptions
|
