Ten percent tax levy on Treasury bonds to be eliminated
The introduction of the new Inland Revenue Act last week would result in the 10% withholding tax levied on government securities being eliminated with effect from April 2017.
At the time of the “committee stage”last week Minister of Finance, Mangala Samaraweera shifted changes to clause 84 of the bill.
The newly introduced section d) of clause 84 provides the exemption that “…discount interest or paid to a person on security of Treasury bond under the Registered Stock and Securities Ordinance (Chapter 420) or Treasury bills under the Local Treasury Bills Ordinance (Chapter 417).”
At present a 10% withholding tax is levied on Treasury bills an interest quoted in the market net of tax.
“The 5 percent withholding tax rate is applicable at the time of payment of interest,” Thanuja Perera, Consultant to Sri Lanka’s Finance Ministry has reportedly a forum organized by the Ceylon Chamber of Commerce (CCC) referring to corporate debt.
“So payments made after this date – after April 01, 2018 – will be subject to the 5 percent withholding tax,” he has added
Elimination of the 10% withholding tax levied on Treasury bills will encourage more people to invest in them.
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