KPMG in Sri Lanka discusses the Inland Revenue Act No 24 of 2017 (New IRA) and deferment of VAT on the sale of the residential accommodation
Inland Revenue Act No 24 of 2017 (New IRA)
- The Central Bank of Sri Lanka has issued a circular on 16 April 2018, exempting any income (interest, discount or capital gain) including any income earned in Secondary Market by the Non Resident, on foreign or local currency denominated (which includes treasury bills and bonds) issued by the government or on behalf of the Government. The same is yet to be legislated.
- The new IRA has introduced a Withholding Tax (WHT) on payments made to a non-residents persons. The Act says in respect of a Service fee or an insurance premium with a source in Sri Lanka will be liable to WHT at 14% if such payment is made to a Non-resident. Further the Act allows the Commissioner General of Inland Revenue to prescribe the WHT rates in respect of payments to non-resident persons for certain transport services and telecommunication services. Accordingly the WHT rate is 2% was prescribed via a Gazette dated 01 April 2018.
The proposed introduction of VAT on the sale of the residential accommodation with effect from 01 April 2018, has been deferred till 01 April 2019. Hence the current exemption in relation to the sale of residential accommodation will continue to be in effect.