Summary Budget proposal 2017
100% capital allowance on investment in sugar manufacturing factories. 2% CESS on import of Sugar, 5% on import of Ethanol Advanced Level students and Advanced Level teachers to receive Tablet Computers RoC will be opened all 7 days of the week, except on National holidays. Exchange Control Act will be repealed and replaced with Foreign Exchange Act 200% Capital Allowances for Northern Province Investors, 100% Capital Allowance for Eastern Province Investors Agency for Development to be established to facilitate foreign investment. Apparel sector to be permitted to invest outside Sri Lanka. Corporate tax exemption for headquarters of International Organizations located in Sri Lanka 1
2 Remove 25 % CESS on import of Pre-fabricated Structures. Entrepot trading to be permitted on NFE basis Import Export control fee of 1% on CIF price of Tea to be abolished Fee on packing of tea and logo registration to be removed. Customs levies on all materials needed for prototypes will be removed. Tax holidays for large-scale investments made in under developed regions of the country Incorporate a company on PPP basis so that all telecommunication towers will come under the same 75% waiver on PAL on importation of high tech equipment Amendments to the Debt Recovery Act
Flexible working hours for the Private sector Proposal to establish Consumer Financial Protection Authority Minimum room rate of a hotel to be abolished Proposal to create a Real Estate investment trust Special board for listing of SMEs at CSE to be introduced. A special SEC Act to be introduced Remove conditions applicable for foreigners on ownership of ground floor condominiums A special Colombo Stock Exchange Act to be introduced Foreigners eligible to buy condominiums with a loan of upto 40% of the value Highway Toll charges to be reduced by Rs.50 between 9.00pm to 5.00am 3
4 Capital Gains Tax to be introduced from April 2017 PAYE tax will apply on earnings more than LKR 100,000 per month Withholding Tax on Interest Income increased to 5 % Telecommunication Levy to be increased by 25% Corporate income tax comprises of three layers; 14%, 28% and 40% 14%- SME, Education, Agriculture, Export, Inv Funds 28%- Trade & Manufacturing, Banking & Finance, Insurance 40%- Tobacco & Liquor, Betting & Gaming, Casino Carbon Tax will be introduced Revision in rate of Capital Allowance Tax on dividends increased to 14% A rebate will be given equal to 75% of income tax attributable to foreign currency earnings in excess of a 15% increase from Y/A 2016/17 vis-à-vis Y/A 2015/16
WHT of 5% will be imposed on specified fee of more than LKR 50,000 per month The period of appeal hearing at the Tax Appeal Commission will reduce to 6 months from 24 months A Capital Gain Tax will be imposed at the rate of 10% on gains realized from disposable of immovable properties The period for appeal hearing by CGIR to be reduced to 6 months from 24 months. VAT refund mechanism on goods purchased by foreigners who stay in Sri Lanka for less than 30 days The progressive tax structure for individuals will be from 4 % to 24% having equal tax slabs of LKR 600,000 each SVAT system will be terminated ESC threshold is reduced to LKR 12.5 Million per quarter Embarkation Levy will be increased to USD 50 5
6 The present annual levy on the business of gaming to be increased to LKR 250 Million The Special Commodity Levy on white sugar to be revised to LKR 7/kg from LKR 2/kg Telecommunication Levy on Internet services will be increased to 25% The present exemption on interest on savings accounts upto LKR 5000 per month will be removed The present exemption on dividends received by corporate unitholders of Unit Trusts and Mutual Funds will be removed Present exemption on certain dividends & interest or profits from investments on listed securities & other instruments will be removed The notional tax credit will be removed and the income on instruments subject to upfront tax such as TBS, Bonds or Corp Debt Securities will be taxable on the net interests This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwC Sri Lanka does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. 2016 PricewaterhouseCoopers (Private) Limited, LiabilityCompany incorporated in Sri Lanka. All rights reserved. PwC refers to the Sri Lanka member firm, and may sometimes refer to the PwC network. Each member firm is a seperate legal entity. Please see www.pwc.com/struture for further details.