6 February 2020 09:15 am
Sri Lanka’s Inland Revenue Department (IRD) has announced the exemption of the Withholding Tax (WHT) on payments, including interest, dividends, rent, etc. made to residents and the removal of the PAYE tax on employment receipts made to both residents and non-residents, with effect from January 1, 2020.
The abolishing of the WHT is part of the new government’s economic stimulus package, which was announced last November, aiming to revive the economic growth.
The government earlier announced that only interest income up to Rs.250,000 per month would be exempted from the WHT. However, as per the tax note by the IRD, the exemption has also been extended to dividend and rent payments made to residents as well.
The IRD stated that the measure is implemented as per the instructions of the Finance Ministry on January 31, 2020, pending the formal amendment to the Inland Revenue Act No. 24 of 2017.
However, the WHT on the payments made to residents for winning from lottery, reward, betting or gambling continue at 14 percent, while 2.5 percent WHT also remains on sales of gems at auctions conducted by the National Gem and Jewellery Authority for residents.
Further, the IRD stated that the WHT on payments made to non-resident persons also continue under Section 84 & 85 (other than on employment receipts).
Accordingly, the withholding agents, including employers, are instructed not to deduct any WHT/PAYE on payments to be
made (other than on payments of winnings from a lottery, reward, betting or gambling and sale of gems), on or after January 1, 2020, for the
specified individuals.