Key proposals
Exempt from Corporate Income Tax
College of General Practitioners of Sri Lanka, Sri Lanka Social Security Board
Certain public Corporations – Sri Lanka Savings Bank, Lanka Puthra Development Bank (Effective from 1.04.2013)
Exemption of tax on profits and income from offshore business
Royalty, franchising or designing fee paid by certain BOI companies to any foreign collaborator of any Government assisted private school
Interest income on quoted Corporate debt securities and on municipal bond
Interest income on bonds issued to a person in Sri Lanka by persons outside Sri Lanka. (Effective from 1.01.2013)
Sale of goods manufactured in Sri Lanka by export oriented BOI companies to certain enterprises
Interest income on specified loans granted by DFCC and NDB banks
Transaction relating to manufacturing, distributing and marketing of organic fertilizer and pesticides. (Effective from 1.04.2013)
Reduction in (tax) rates
Unit Trust Management Companies – from 28 per cent to 10 per cent
Poultry farming – from 12 per cent to 10 per cent
Rate reduced by 50 per cent of a company listed on or after 1.4. 2013 and issued more than 20 per cent shares to the public
Organic tea in bulk – from 28 -12 per cent
Person or partnership operating mini hydro power projects – from 28 to 12 per cent
Supplier of goods manufactured in Sri Lanka or provision of services to foreign ships for payment in foreign currency- from 28-12 per cent
Sale of products manufactured in Sri Lanka for foreign currency from 28-12 per cent. (Effective from 1.04.2013)
Rates of depreciation allowance –plant, machinery and equipment
For upgrading technology and introducing new technology – 50 per cent
For providing more than 30% of the power generated through alternative energy resource – 100 per cent
For broker back office system relating to risk management system -100 per cent
For any export industry -50 per cent (Effective from 1.04.2013)
Allowable expenses
Triple deduction for research and development expenditure carried out through private institutions
100 per cent of the sponsorship expense (advertisement) of international sports events approved by Minister of Sports. (Effective from 1.08.2012)
Threshold on turnover
Turnover threshold of 300 million increased to 500 million to be eligible to the concessionary rate of 10 per cent
Time Bar
2 years will be reduced to 18 months. (Effective from 1.04.2013)
Personal Income Tax
Reduction in the maximum rate –
Pilots and qualified employees referred under Sections 40A and 40B: 20 -16 per cent
Compensation for loss of employment which is not uniformly applicable – 16 per cent
Exemptions
Emoluments of expatriates working for certain BOI companies
Profit and income derived from any source outside Sri Lanka will be exempt if remitted to Sri Lanka through a bank
Profits and income derived from outside Sri Lanka by Sri Lankan citizens having permanent resident status in any other country will enjoy the same exemption granted to a dual citizen
Bowsers: Bulldozers, graders, levellers, excavators
Tractors for semi-trailers
Raw materials for the manufacture of energy saving bulbs
Individual who returns from foreign employment and invest saving on commencing new business – exempt from all taxes for 5 years. (Effective from 1.04.2013)
Value added tax (VAT)
Exemptions:
Supply of services by Central Bank of Sri Lanka (including the VAT on financial Services).- Supply of services by any Public Corporation on behalf of the Government, free of charges out of the funds voted by the Parliament from the Consolidated Fund or out Budget Proposals 2013 of any loan arranged through Government.
Supply of services by Unit Trust management company who supply services to Unit Trust
Provision of hotel accommodation to any sportsman and organizers, arriving in Sri Lanka for participating in any sport or activity connected with sports
Supply of locally manufactured products out of coconut waste.
Imposition of VAT
Wholesale or retail business if quarterly turnover is Rs 500 million or more
New threshold
Person or Partnership whose annual liable turnover does not exceed Rs. 12 million will not be liable for VAT. (Effective from 1.01.2013)
Nation Building Tax: Imposition of Turnover
Wholesale or retail business if quarterly turnover is excess of Rs. 500 million
New threshold: Person or Partnership whose annual liable turnover does not exceed Rs. 12 million will not be liable for NBT.
Economic Services Charges
Exemptions:
Funds voted by Parliament; from the Consolidated Fund, or from any loan arranged through the Government for the provision of services on behalf of the Government of Sri Lanka by any Public Corporation will not be treated as turnover for the purposes of ESC.
Telecommunication Levy
Reduced from 20 per cent to 10 per cent for services provided through Internet/broad band to IT and BPO sectors
Embarkation Levy/ Visa fee
Embarkation levy increased to US$ 25
Online visa fee –increased by US $ 5
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