The government is likely to exempt the income tax liability on interest or discount paid to non-residents on rupee-denominated sovereign bonds, under the new Inland Revenue Act.

Under the Inland Revenue Act No. 24 of 2017, the interest or discount paid to non-resident persons and commercial banks in Sri Lanka on sovereign bonds denominated in foreign currency is exempt of payment of income tax.

Government sources said the new measure will maintain the status quo in relation to the tax liability of foreigners on government securities.