Information and Communications Technology Minister and co-Cabinet spokesman Bandula Gunawardana underscored the importance of the overall slashes in the tax structure with the advent of the new Government and stressed that it would result in profits rather than losses.
“We have done this before. Our priority is to reopen closed-down businesses and revive the economy which will see an overall economic growth in contrast to the high loss making corporates which pay no taxes, Minister Gunawardana told the Sunday Observer.
He observed that the gains already made in the Colombo Stock Exchange bear testimony to the overall benefits of the tax reductions adding that these reductions would pave the way for not only additional investments in the stock market but other investments in the industrial, commercial and service areas as well.
Meanwhile, Chairman, Tourist Hotels Association and Mount Lavinia Hotel, Sanath Ukwatte said the industry was confident there would be a remarkable increase in tourist arrivals now that Sri Lanka had a security-conscious President.
“Changing Governments doesn’t make tourist arrivals rise, but the environment has been created for tourism to pick up”, he said.
He said the tourism industry was awaiting the Government to gazette notification to grant export status for the industry.
Dialog Axiata PLC Group CEO Supun Weerasinghe said they would definitely pass on the benefits of the tax reductions to the consumers and that the Company was awaiting instructions from the Telecommunication Regulatory Commission.
Meanwhile, Minister Gunawardana at a media briefing held at the Information Department on Thursday (28) said in a major boost for the digital economy, the country’s Information Technology (IT) sector will be completely exempted from all taxes.
He said the IT sector is the only income source that has been totally exempted from all taxes including income tax, Value Added Tax (VAT) and Nation Building Tax (NBT).
“Considering the urgent need to fast-track development of the country’s IT sector, the President has taken this decision and it will definitely make a huge impact on the rapid growth of the IT sector,” the Minister said.
Elaborating on the Cabinet Paper forwarded by President Gotabaya Rajapksa at the first Cabinet meeting of his Government, the Minister said all public and private sector workers have been completely released from the Pay As You Earn Income Tax (PAYE Tax) and all persons who earn an income of more than Rs.250,000 per month would be subjected to pay Income Tax.
The Minister said the maximum tax on income has also been reduced from 24 percent to 18 percent and three tax rates have been introduced at 6 percent, 12 percent and 18 percent from the tax free ceiling of Rs.250,000.
“With the abolition of the Withholding Tax on interest income, fixed deposits and all the other savings accounts including children’s savings accounts, interests will be exempted from withholding tax,” the Minister said.