Sri Lankan government to work to improve foreign investments in government securities

Sri Lankan government to work to improve foreign investments in government securities

The government of Sri Lanka is reportedly planning to introduce new measures that will be boost foreign investments into Government securities.
Under the Inland Revenue Act No. 24 of 2017 (effective 1 April 2018), the interest or discount paid to non-resident persons and commercial banks in Sri Lanka on government securities is liable to income tax, according to reports.
Local media reports quoting sources have said that in order to maintain the status quo in relation to tax liability of foreigners on government securities, the exemption will be expanded to income from interest or discount paid to non-residents under the Inland Revenue Act No. 24 of 2017 as well.
Last year, cumulative net foreign inflows to the government securities market has amounted to US$ 452 million, up from US$ 310 million as of end October 2017.
Analysts have reportedly said that the original rule under the Inland Revenue Act had raised concerns among existing and prospective foreign investors in to government securities and there was a danger of such investments being pulled out or scaled down.
However, the anomaly will be rectified with the proposed change making the foreign investment regime more favourable and in turn boosting foreign inflows to the country.

OSL take:

The latest move by the Sri Lankan government is expected to increase the interests of foreign investors to invest in government securities. Hence, it will be a new investment opportunity in Sri Lanka for foreign investors.

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Article Code : VBS/AT/20180212/Z_2

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