The 2021 budget, presented 17 November 2020, includes tax proposals.
In particular, the 2021 budget proposes certain tax concessions (tax holidays for a period of years) for qualifying investments in export, dairy, fabric, agricultural, shipbuilding, recycling business sectors and for information technology. Other concessions are proposed for multinational entities, with a 25% reduction in tax on dividends in 2021 and a 50% reduction in 2023.
Regarding direct taxes:
Regarding indirect taxes:
The VAT rate applicable on import and supply of goods and services was reduced to 8% (from 15%) effective 1 December 2019 and subsequently the change to the VAT rate was published in official gazette No 2151/52 (29 November 2019). The 2021 budget proposes that the VAT rate change to 8% would be maintained consistently during the next five years except for banking, finance, and insurance sectors.
Read a November 2020 report [PDF 158 MB] prepared by the KPMG member firm in Sri Lanka
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