President Anura Kumara Dissanayake announced in Parliament that the PAYE tax exemption limit has been increased from Rs. 100,000 to Rs. 150,000, following discussions with the International Monetary Fund (IMF) during the third review.

“We have held discussions and were able to raise the tax threshold from Rs. 100,000 to Rs. 150,000 per month,” President Dissanayake said.

The decision was made in response to concerns raised by professionals in Sri Lanka about the PAYE tax system, the President added. (Newswire)

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Sri Lanka Podujana Peramuna (SLPP) Presidential candidate MP Namal Rajapaksa has vowed to systematically amend the Value Added Tax (VAT) and Pay As You Earn (PAYE) Tax currently implemented in Sri Lanka. 

MP Namal Rajapaksa further states that by rectifying the issues at the Customs, Inland Revenue, and Excise Department, the expected government revenue will be increased.

By reducing the taxes that have severely burdened the public, the cost of living and prices of essential goods will be brought to a level that could be managed by the public, he said.

SLPP Presidential candidate MP Namal Rajapaksa made the vows in his election manifesto that was unveiled today. (Newswire)

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The election manifesto of the Samagi Jana Sandhanaya Presidential candidate MP Sajith Premadasa outlines the changes it will make concerning the Pay As You Earn Tax (PAYE).

The election manifesto, titled ‘A win for all’, states that the unfair burden-sharing structure of the International Monetary Fund (IMF) supported tax code revision that is forcing professionals to seek employment abroad, will be revised. 

“The solution to increase government revenue is not confined to raising taxes. One of our first acts will be to introduce digital technology to increase revenue, and minimize expenditure and corruption,” the manifestos states. 

As per the election manifesto, some highlights of the revised structure that will not disturb the overall revenue targets, but will reduce the heavy burden on the middle class, are as follows:

• Personal Income Tax: 

Personal income tax after the Tax-free slab of Rs 100,000 per month will start at just 1% and increase up to 24% income up to around half a million per month. Thereafter, current rates will apply to high-income earners. 

• Corporate Income Tax: 

We intend to reduce up to 6% from the present 30% rate for profits on exports and introduce a 15% Base Erosion and Profit Shifting  (BEPS) minimum alternate tax for multinational companies. 

• Value Added Tax (VAT) : 

We intend to reduce VAT to 15% once tax compliance improves through the use of Public Digital Infrastructure to widen the tax net. Certain identified items in addition to essential food as consumables and inputs shall be made zero-rated for VAT. 

• Excise tax on cigarettes and alcohol and taxes on casinos will be adjusted to fund tax reductions. 
• A guaranteed up to 15% savings interest rate will be provided for senior citizen savings. (Newswire)

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Opposition MP Dr. Harsha de Silva says President Ranil Wickremesinghe’s announcement that the government has reached an agreement with the International Monetary Fund (IMF) to revise the Pay As You Earn (PAYE) tax, was a fact that he had argued as possible since 2023.

Taking to ‘X’, MP Harsha de Silva said that the Samagi Jana Balawegya (SJB) has already announced a ‘middle-class tax cut’, including Personal Income Tax and PAYE.  

“The President says today he will amend PAYE tax, something he said can not be done. I argued since 2023 that it was possible. We already announced a ‘middle-class tax cut’ (PIT including PAYE) without false promises of doubling the tax-free threshold (JVP) nor lowering the highest marginal rate,” he said, in a message on ‘X’. 

His comments come after the President announced that the government has reached an agreement with the IMF to revise the PAYE tax, a significant concern for the public, assuring that following further discussions, relief measures would be implemented as soon as possible.

Addressing a public rally in Eheliyagoda yesterday, the President also criticized Sajith Premadasa and Anura Kumara Dissanayake for making unrealistic promises about reducing taxes and easing the people’s burdens.

He cautioned that following their proposed path could lead to severe shortages, leaving the public once again without essential supplies such as gas, fuel, and medicine.

“Currently, income tax has become a significant issue. We have reached an agreement with the IMF on the need to revise it, and I can confirm that a basic decision has already been made. Both parties have submitted proposals, and once we have discussed and agreed on a common approach, we will be able to provide relief to the public” the President said. (Newswire)

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The Pay As You Earn (PAYE) Tax is only being imposed on 2.6% of the workforce, State Minister of Finance Ranjith Siyambalapitiya said.

Speaking in Parliament yesterday (10), State Minister Siyambalapitiya said that the workforce of Sri Lanka is 4,645,572 out of which 2,231,620 receive a monthly salary less than Rs. 30,000.

He further said that therefore, only 120,925 persons or 2.6% of the workforce fall under the PAYE Tax category.

Stating that the expected state income for the year 2023 is Rs. 3,615 billion and the expenditure is Rs. 5,419 billion, the State Minister said a 350% difference is reported between the income and expense for January 2023.

State Minister Ranjith Siyambalapitiya pointed out that under the current circumstances, the government cannot print money and neither can it obtain foreign loans, while loans that can be obtained from local banks have reached a maximum limit.

The State Minister of Finance added that everyone must bear with the difficulties of the economic crisis at present, and act in a responsible and thoughtful manner. (NewsWire)

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The Department of Inland Revenue has issued a revised circular pertaining to the relaxation of certain incentives provided at employment for an employee.

As per the revised circular, the benefits primarily include company shares, residence, transport facilities, communication facilities, and non-cash benefits provided to an employee.

The calculation of an employee’s gains and profits for any month commences on January 01, 2023, according to the circular.

The amounts to be included as benefits to be received or derived by such employee from the employment are specified by the Commissioner General of Inland Revenue (CGIR) in terms of the provisions of the Inland Revenue Act, No. 24 of 2017.

The revised circular has been approved by President Ranil Wickremesinghe in his capacity as the Minister of Finance.

Meanwhile, State Minister of Finance Ranjith Siyambalapitiya has confirmed that the Department of Inland Revenue has issued a circular to exempt noncash benefits of employees’ income from the Pay-As-You-Earn (PAYE) Tax.

“The Inland Revenue Department has issued a circular to exempt noncash benefits of employees’ income, including vehicle & fuel allowances, housing, medical benefits etc. from the PAYE tax,” State Minister Siyambalapitiya told Ada Derana. (NewsWire)

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