Recent Tax Reforms of Sri Lanka | How this will affect our Future?

Well, it's a known fact that Sri Lanka is going through a rough patch. A few months back, we were named a default country being unable to pay back the foreign loans. And now the government officially declared us as a low-income nation. The Foreign reserves drastically reduce without proper planning by this and old corrupt governments. Well, I don't entirely blame these stupid politicians. It's we who appoint them with the so-called Democratic votes. And they are just a representation of the majority of Sri Lankan people. So, now we are facing the repercussions.

Economic Crisis In Sri Lanka

Low-income people already struggle with inflation and unemployment. Middle-income people tried their best to hang on. Young people, some companies especially in the IT and Apparel field, continuously work hard to give some hope to the country. But yet again there is a huge slap on the people.

The Income tax and conditions were drastically changed with the Gazette issued on 11 October 2022. You can read the full details from this presentation, Income Tax amendment Gazzette, by Azzam Ameen. The rates were increased unbearably, and those who take salaries of more than 1 lakh (USD 273) are eligible for this PAYE tax category. Just see the below chart, and you will understand.

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Think of a person who gets an Lkr. 400,000 as the salary(Rs.)

The range	percentage	amount to pay as tax ()
First 100,000	Tax free	-
First Rs.41,667	6%	2,500
Second Rs.41,667	12%	5,000
Third Rs.41,667	18%	7,500
Forth	24%	10,000
Fifth	30%	12,500
The remaining Rs.91,667	36%	33,000

So, a total of Rs. 70,500 has to be paid as PAYE tax. It's ridiculous. Isn't it?

My concerns about this matter

• It's a common thing to pay taxes in every country. But it should be either direct/ indirect. It should be mainly direct tax but bearable rates.

• People with less than Rs. 100,000, don't care about this matter and saw sharing memes. But they are already f#. And this gazette not only focuses on that salary, the other rates also increased a lot. And even they are taxing for FIXED deposits, every income-generating paths were taken into the consideration.

• This level of salary is taken especially by the private sector employees. They work really hard for that and their productivity level is way more than the government sector, which most of them are running under loss. But the funny thing is to maintain that unbearable government sector we have to pay taxes. And recently COPE committee reveals that common people are paying the income taxes of employers in the Central bank, NSB, Peoples, CEB, BOC, etc. It's ridiculous.

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• Government should make it easy for the people who work hard to make this a better place. So, with this I feel a lot of migrations will be seen, already there are, but it will be high. Mainly those who bring dollars to Sri Lanka and professionals.

• We know that the IT industry in Sri Lanka, performed really well recently and they pay good money to Employers as well. So, this taxation will be a hard slap for these guys. Now they have decisions to make about staying here or not.

• But still the Politicians have not taken this seriously. People have already come to their limits to blast once again. Now it's time for every Sri Lankans to think about the country and take the necessary steps, I guess. Each and every person can't go abroad. So, it's now or never. We have to stand up for our rights.

Until the next time! Let's hope for a better future!

Thank you.
Best Regards!