Categories: Business

Sri Lanka to tax foreign currency deposit interest

Sri Lanka will tax foreign currency deposits in the future in the same manner as rupee deposits through a new income tax law that will come into effect next year, a tax expert said. Non-resident foreign currency accounts are were exempted from tax as an incentive not to keep dollars earned abroad in foreign banks. Sulaiman Nishtar, Partner at Ernst and Young said under the new law, a withholding tax of 5 percent will be deducted by banks as a final tax, up from 2.5 percent. Companies will be liable at 5 percent, but it will not be final tax and will form part of the taxable income.

Clubs and associations will be charged 5 percent withholding tax on interest but, it will not be a final tax and they will have to pay tax on income at 28 percent. However foreign currency income earned from services rendered in outside Sri Lanka will be exempt up to 15 million rupees.

Lankanewspapers

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