Global

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  • Service: Tax, Global Indirect Tax, International Executive Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 2/6/2014

Sri Lanka - Tax incentives for investors in budget 2014 

February 6: The Sri Lankan government’s 2014 budget was presented in late November 2013.

One of the proposed measures would provide a tax exemption for amounts in a redistribution of offshore dividend income, provided the company makes the redistribution within one month from the dividend’s receipt. Currently, this exemption is restricted to dividend income received from a resident company.


Other 2014 budget provisions of interest to foreign investors would:


  • Grant an income tax holiday and other exemptions to companies that relocate any international or regional headquarters into Sri Lanka
  • Impose tax on employment income received by a professional at a maximum rate of 16%
  • Extend a concessionary rate of 12% to profits derived on the supply of certain services to exporters of goods or services and foreign principals, provided certain criteria are met
  • Extend the cut-off date for the concessionary tax rate for shares listed on the Colombo Stock Exchange (proposed in last year's budget) from 1 April 2014 to 1 April 2017
  • Impose tax on services related to the shipping industry at par with export income at a rate of 12%
  • Accelerate to April 2014 (from April 2015) the time limit for qualifying payment relief for investments made to expand an existing business
  • Restrict the three-year exemption for companies engaged in R&D activities to investments made before April 2014
  • Allow a deduction for costs incurred for skills development for trainees in the shipping industry, to a limit of 10% of income tax payable
  • Allow a deduction for the cost of acquiring intellectual property related to international brands
  • Exempt dividends received by a shareholder representing a redistribution of offshore dividend income, provided certain criteria are met
  • Enact this year the property transfer tax (leasing of land by a foreign investor is to be made liable to a 15% “upfront” tax)

Read a January 2014 report prepared by the KPMG member firm in Sri Lanka: Sri Lanka – Highlights of budget 2014




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