Newly-elected Sri Lankan government announces tax cuts

The newly-elected Sri Lankan government has announced a range of tax cuts in keeping with President Gotabhaya Rajapaksa's election pledges. Rajapaksa, who took over as the country's president last week, had pledged a series of economic relief measures in the run-up to the November 16 presidential election.

Cabinet approved a cut of value-added tax (VAT) to 8 percent from 15, removed withholding tax on interest, a debit tax and halved income tax on construction companies, Bandula Gunawardena, senior minister, and Cabinet spokesman, said. A 2 percent nation building tax on domestic goods and services would also be removed.

A capital gains tax on stocks, a debt tax on financial institutions and debt service tax has also been removed. The pay as you earn tax deduction from monthly wages up to rupees 250,000 has also been removed.

An existing telecommunication tax would be cut by 25 percent. There will also be a series of import tax cuts.

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