Sri Lanka increases Withholding Tax from 5% to 10%

The Government of Sri Lanka has decided to increase the withholding tax from 5% to 10%.

Sri Lankan President Anura Kumara Dissanayake revealed today (December 18) in Parliament that an agreement has been reached with the IMF to raise the withholding tax from 5% to 10%.

The President’s clarification on the matter is as follows:

“We have agreed to increase the withholding tax from 5% to 10%.”

“Generally, elderly people, retirees, deposit some money in banks and live off the interest they receive.”

“Normally, if someone earns Rs. 150,000 in interest per month, they are subject to tax. However, what could happen through the withholding tax is that even if someone earns less than Rs. 150,000, there is the possibility of imposing a withholding tax.”

“Therefore, we are opening a new department under the Inland Revenue Department (IRD). Any citizen who believes they are not subject to this tax on their bank account can present their tax status to the IRD and have the possibility to avoid inclusion in the tax.”

“The expectation here is that individuals with a monthly income lower than Rs. 150,000, such as retirees and those who pay less than the 10% tax rate, will not be subject to withholding tax, and the IRD will provide an opportunity to request lower withholding tax rates.”