Budget 2017

Budget 2017 – Sri Lanka

Finance Minister Mr. Ravi Karunanayake will present the third budget of the National Unity Government of President Maithripala Sirisena and the Prime Minister Ranil Wickremesinghe on Thursday at 2.00 pm in the Parliament. This will be the 70th Budget of independent Sri Lanka. Mr. Karunanayake will unveil it as a full time Finance minister after Mr Ronnei de Mel did it under then J.R. Jayewardene government through 1988.

The Minister of Finance said that 2017 Budget will be a pro-growth budget which will focus on the deficiencies for the last several years. Accordingly the budget would have proposals to rectify all the anomalies that are there to deal with export sector to create job.

“It will be a real over view and over look of all the sectors of the economy that is beneficial to the people in the short run and long run,” summarized the minister about his budget secrets.

The minister said that the economy inherited was not an easy for any Finance Minister to manage due to over Rs 9.9 trillion public debt besides Rs 1.2 TRILLION debt off the balance sheet. However, with strict financial discipline, the government was able to pay attention on the financial consolidation and reducing the budget deficit.

Minister Karunanayake said that the government targets a fiscal deficit of 3.5 percent of GDP by 2020 where it has planned to reduce it to 4.7 percent next year from a targeted 5.4 Percent in 2016

The value of the GDP has increased to Rs 11,183 Billion (US$ 82.3 B) in 2015 from Rs.6,414 Billion (US$ 56.7B) in 2010. Sri Lanka has a new phenomenon in its expenditure chain where a sizeable portion goes to social welfare and subsidies. The next year’s budget will allocate around Rs 380 billion on welfare and subsidies.

Once the Budget is presented in the Parliament on Thursday the debate on the second reading and the committee stage will continue till 10 December including Saturday

 

 

Tax on Dividend & Remittance

10% tax shall be paid at the time of dividend is distributed by a Resident Company in Sri Lanka or profit is remitted to other Country by a non-resident Company.

Income from dividends on investment made by non- citizens or foreign companies in listed shares through inward remittance will be exempted from income tax with effect from 1st April 2016.

Value Added Tax : with effect from 1st November 2016

Revision of VAT Rate The VAT rate on supply of Goods or Services including the supply of Financial Services has been revised. From 02.05.2016 to 11.07.2016 rate is 15%, from 12.07.2016 to 31.10.2016 rate is 11% and for any period from 01.11.2016 15%. the liable limit for registration of VAT by a person carries on any taxable activity other than wholesale or retail trade but including Financial Services is reduced to Rs. 3 million for a taxable period of three months or 12 million in the twelve months period. The requirement for the registration by any person or partnership shall arise with effect from May 02, 2016 where the value of supply of them exceeds Rs. 3 Mn for the taxable period commenced on or after April 01, 2016. Liable threshold for VAT registration for wholesale and retail trade for any consecutive period of 3 months in a calendar year is reduced from Rs.100 million to Rs. 12.5 million with effect from November 01, 2016.

Nation Building Tax

NBT rate should be continued at 2 %. The present threshold of exempt turnover other than the turnover of any locally procured agricultural produce in the preparation for sale, is reduced to Rs. 3 Mn from the quarter commencing on or after April 1, 2016 . Accordingly, any person or partnership is liable for NBT, if the turnover from any business (other than the turnover of any locally procured agricultural produce in the preparation for sale) including the turnover of following businesses, exceeds Rs. 3 million for any quarter: – Operating a hotel, guest house, restaurant or other similar business; – Providing educational services locally ; – Supply of labour. The exempt threshold of turnover of any locally procured agricultural produce in the preparation for sale will remain at Rs. 25 Mn for a quarter.