Sri Lanka budget 2022: 25-pct tax surcharge on large firms, 2.5-pct turnover tax

ECONOMYNEXT – Sri Lanka will charge a one-off 25 percent surcharge on large companies earning more than 2.0 billion rupees in profits and a 2.5 percent turnover tax called social security levy, Finance Minister Basil Rajapaksa said.

The surcharge will apply to 62 large companies and will only be charged in 2022, Minister Rajapaksa said presenting a budget.

It will be charged on the year of assessment 2020/21.

The one-off tax is expected to bring in 100 billion rupees. Retrospective taxes however undermine the rule of just law and bring in uncertainty to the business environment.

A 2.5 percent ‘social security’ tax will be charged from companies above 120 million rupees in turnover. It will come into effect from April 01. The social security tax is expected to bring 140 billion rupees. Turnover taxes are cascading unlike VAT.

Sri Lanka’s current fiscal and monetary problems came from a cut in value added tax, which are not cascading and will improves export competitiveness.

Financial VAT on finance companies and insurance companies will go up from 15 to 18 percent.

The should be paid monthly from 01 January 2022 to 31 December 2022. It is expected to bring 14 billion rupees.

Ciggarate taxes will go up by 5 rupees a tax which is expected to bring in 8 billion rupees in revenues.

Excise taxes will be increased from tonight and 25 billion in revenues.

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