Sri Lanka: Tax developments in response to COVID-19
General Information
This page offers an overview of tax developments being reported globally by KPMG member firms in response to the Novel Coronavirus (COVID-19).
The content will be updated regularly. However, due to the fast-moving pace of change, it may not always reflect the most current developments in a given jurisdiction. Please refer to the date of accuracy and refer to the relevant links, under additional information, for original source information.
Date accurate as of: 28 October 2020
The Department of Inland Revenue issued a release reflecting proposed tax amendments to the Inland Revenue Act No. 24 of 2017 and Value Added Tax Act No. 14 of 2002 (as amended). There are also tax relief measures announced in response to the COVID-19 pandemic.
Tax relief related to COVID-19
Extension of statutory deadlines: Statutory deadline for filing following tax returns/statements have been extended to 31 December 2020:
- PAYE Tax return for the Year of Assessment (Y/A) to be submitted by employers
- Annual statement of Withholding Tax for Y/A 2019/20
- Economic Service Charge Return for Y/A 2019/20
- Compounded Stamp Duty Return for the quarter ending 31 March 2020
- Betting & Gaming Levy Return for the quarter ending 31 March 2020
- Value Added Tax (VAT) returns for the months of February, March, April, May of 2020 and quarter ending 31 March 2020
- VAT on Financial Services (VAT on FS) return for the Y/A 2019/20 (for financial institutions which submit returns on accounting year basis), and VAT on FS Interim Estimate for last six months of the Y/A 2019/20 (for financial institutions which submit returns on year of assessment basis)
- Debt Repayment Levy return for the Y/A 2019/20 (for financial institutions which submit returns on accounting year basis).
Suspension of the “Notices of Recovery of Tax out of Debts”: Relief has been granted in the form of suspension of the notices issued to banks for the recovery of taxes in default from any defaulters’ bank accounts, until 31 December 2020. In the case the defaulter is a Small and Medium Enterprise, the suspension has been granted until 30 April 2021.
Value added tax (VAT), extension of validity periods: The period of validity of the extension letters issued last with regard to credit vouchers due against the VAT deferred on imports under deferment facility are extended until 31 December 2020. The period for any temporary VAT registration scheduled to expire before 31 December 2020 has been extended until 31 December 2020.
Introduction of facility for online tax payments: Considering the prevailing situation, the Department of Inland Revenue has introduced an Alternative Tax Payment System (ATPS) for making tax payments through Online Fund Transfer Facility, with the collaboration of specific banks, with effect from 8 April 2020.
Main sources of information:
- Further Extension of Tax Return Submission Dates PAYE, WHT, ESC, Stamp Duty, B&GL, DRL & VAT (PDF 638 KB)
- Suspension of the notice of "Recovery of Tax out of Debts" (PDF 526 KB)
- Suspension of the “Notices of Recovery of Tax out of Debts” (PDF 548 KB)
- Value Added Tax (VAT) Deferment Facility & Temporary Registration (PDF 212 KB)
- Alternative Tax Payment System (ATPS) through Online Fund Transfer Facility (PDF 558 KB)
