Global

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  • Service: Tax, International Corporate Tax, International Executive Services, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 8/27/2012

Sri Lanka - Income tax provisions, incentives, and rates 

August 27: New income tax provisions are introduced in Sri Lanka via the Income Tax Amendment Act No. 8 of 2012.

Among the incentive regimes are:


  • An exemption from income tax for new undertakings, “medium scale” undertakings, and certain “large scale” undertakings (effective from 1 April 2011)
  • A five-year “tax holiday” for certain imports (fabric, pharmaceutical, milk powder, cement)
  • Tax relief with respect to sources of income
  • A tax exemption for profits of certain institutions
  • Amendments to existing exemptions

There are new provisions providing investment relief for business expansion; proposed tax rate reductions with respect to income from certain listed activities (e.g., construction, commercial banking, research and development activities, health care services); and proposed reductions of income tax rates.


Other measures are to address the determination of income subject to tax by revising the rules relating to capital allowance expenditures, research and development costs, travel expenses, and maintenance or management costs.


The provisions relating to administrative requirements concern documentation of returns, investment fund accounts, notice of employment, and dividends.


Read an August 2012 report [PDF 267 KB] prepared by the KPMG member firm in Sri Lanka: Sri Lanka Tax Alert




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