No more vehicle permits

Pay as you earn (PAYE) tax on salaries raised from 750,000 to 2.4 million rupees a year and corporate income tax will be at 15 and 30 percent, personal income tax will be charged at 15 percent and Corporate income tax will be brought down to 15 percent for most companies, Finance Minister Ravi Karunanayake said.

Proposals

Micro, small and medium enterprises
– Micro, small and medium enterprises find it hard to raise equity and debt financing with reluctance of financial institutions to lend to them. Advisory committee to develop SME business sector.
– Policy for micro, small and medium entrepreneurs to cover all issues, regulate the sector
– 500 million rupee credit guarantee scheme up to 75% of principal with participation of financial institutions to protect micro, small and medium scale sector.
– Credit line of USD 100 million from ADB to support MSME lending

Venture Capital for MSMEs
– Venture Capital for MSMEs who can’t provide collateral
– Fund of funds will be set up for VC equity financing
– Fund of funds comprised of Banks, Insurance Companies, state-owned funds such as EPF, ETF and foreign funds. International Finance Corporation (IFC), Asian Development Bank (ADB), private sector invited to contribute
– The fund will lend to responsible VCs for a guaranteed minimum return. VCs will make equity investments in SMEs.
– Incubators to be set up in mini industrial parks in Moneragala, Puttalam, Jaffna/Vanni, and
Ampara. Private sector companies invited to operate in them. A three years tax cut of 50 percent to be granted.
– Tax payable by Private Equity Funds or Venture Capital companies on the profits earned by providing funds to upgrade SMEs registered with the SME Board of CSE up to the trading level, will be reduced by 50% for a period of 5 years.
– A reduction of 50% of the tax payable on profits from locally manufacturing of red clay tiles for a period of 3
years.

Corporate Tax
– revise corporate income tax to two rate band system – higher rate of 30% and standard rate of 15%. Higher rate applicable for income of betting and gaming, liquor, tobacco and banking and financial services, including insurance and leasing industry and the trading activities. All other sectors at 15%. Long term concessions without policy rationale will be revisited

Agriculture
– aim to make the country self-sufficient in maize, soyabeans, chilies, onions, and potatoes by 2018 through crop diversification and productivity
– increase yields from the sector lies in strong collaboration between the private and public sectors
– Need to convert agriculture to agribusiness; Rs1,000mn provision for program to use underutilized state lands as incentive for private-public collaboration for high-quality seeds.
– Companies that promote greenhouse technology and drip irrigation to be provided half tax holidays in order to encourage the production of high yielding seeds.
– a guaranteed price of Rs. 50/kg for Keeri Samba, Rs.41/kg for Samba and Rs.38/Kg for Nadu and other varieties. This would help the consumer to get rice at Rs. 65/kg on average.
– it is time we export our rice, EDB to explore branding rice for export

Dairy Industry
– market share of the domestic milk industry is minimal.
– Maximum retail price of a 400g packet of local milk will be reduced from Rs325 to Rs295, Subsidy of Rs30 to those produce 400g milk; Rs1000 million to be used for the project
– Fisheries Industry: We export 150 million dollars worth fish annually. To encourage local industry I propose, 1 million life insurance for fisherman. Also we encourage tin fish production. Accordingly 300 million rupee concession to be given to Lak Sathosa to see tin fish at a price of 125 rupees.
– Tea Sri Lanka has less value-added tea in the market. So we encourage more value added tea based products. An Active Committee would be establish to look over tea industry. We are planning to move towards being a Tea blending country. But to protect the “Ceylon Tea branding” I propose to look into labeling strictly.
– Two year tax exemption for Tea and Rubber growers
– New economic zone in Vavniya to be setup
– 750 million rupees allocated for the harbor development of Chilaw, Mirissa, Kalmuniai, Karainagar, Poornawella
– Gem and jewelry auctions will be held in Sri Lanka every April and in October with an intention to get a better rate
– Investor friendly foreign exchange control
– Liberalising the lubricant market, remove lubricants from BOI negative list
– 50 licences to be issued for import of Gold without import tax; Proposal has been forwarded to Central Bank
– Thanks companies for one-off Super Gains Tax payments during hour of need
– Abolish SIA Securities Investment Accounts, propose investors to be allowed to bring in money through any bank account
– Proposes to remove the restrictions of leasing of lands to foreigners, and to consider to removing all restrictions on ownership of identified lands through the alienation act.
– Exchange control act to be repealed and proposes a foreign exchange management bill
– National digital identity platform to be established
– 25 billion rupees as capital to setup import and export bank (EXIM) jointly by government and industry. Rs50mn seed capital from government. Will be listed on CSE. Operational from 1st of April 2016.
– Exporters urged to remit proceeds to support motherland
– Foreign reserves to be around US$10bn by mid 2016
– Foreign contractors must work with local contractors
– Proposal to enhance Multilateral Trade ties with USA, China, Korea, South Africa, Saudi Arabia and Australia and to take necessary steps to strengthen ties with International Trade Agencies.
– Expenditure incurred on Solar power by houses will be a qualified payment for tax
– New tax structure to make a ‘shopping paradise’ on several items that will have lower import duties
– Tiles, clay and sanitary wear to be removed from the BOI negative list
– Public private partnerships for tourism sector training with incentives for companies
– Colombo international financial centre – a specific zone in line with Dubai financial centre in DR Wijewardene MW. Casino center of the previous administration to be converted to Colombo international financial center such as the financial center of Dubai.
– Tourism: We have not promoted Sri Lanka enough in the global arena. Tourism industry faces lack of skilled labor. Accordingly 3,000 students will be trained though public private partnership and 50 percent of the course fee will be born by the government. 100 million rupees would be allocated as a start to train workers through a public private partnership.
– Encourage voluntary mergers of banks. Private sector, now its time to walk the talk
– Return of cheques to be considered an offense
– HDFC and State Mortgage and Investment Bank to be merged to create National Housing Bank
– Lankaputra bank to be merged with Regional Development Bank to create Lanka Enterprise Bank
– Creating a savings culture, with banking accounts for children
– Sri Lanka Savings Bank to be merged with National Savings Bank (Divinaguma Bank to be merged with National Savings Bank)
– Foreign holding limit of Government Securities reduced from 12.5 percent to 10 percent
– Banks have to cease leasing activities from mid next year
– Withholding tax to be withdrawn from 2016 for loan securities
– Provisions to boost school infrastructure
– Import duties to be removed on caravans, yachts, mini boats
– Rs3,000 million to setup a new campus named ‘Mahapola University’ at Malabe with IT, Business Management
– Interest free loans for university students to purchase laptops. Rs 300 million for this purpose.
– Kidney dialysis centres to be set up.
– Stamp duty on credit card for local purchases removed, 2.5 percent for foreign purchases
– Every student to complete advance level education or receive vocational training after ordinary level education to be made compulsory.
– 300 million rupees will be allocated to implement Free Wi-Fi zones at universities
– State owned enterprises will not be privatized
– EPF and ETF to be amalgamated after the approval of trade unions
– Forecast budget deficit of 5.9 percent in 2016
– Sri Lanka Budget 2016 reduced the prices of 11 essential commodities :
potato 1 kg Rs. 75 – 85, big onions 1 kg – Rs. 85 – 95, locally produced milk 400g – Rs. 295
Infant milk 1 kg – reduced by Rs. 100, Canned fish – Rs. 125, Dry fish 1 kg – Rs. 1100 (MRP),
Chickpeas 1 kg- Rs. 169 (MRP), Gas – reduced by Rs. 150, Kerosene – reduced by Rs. 10, Sprats 1 kg – Rs. 410 (MRP), Dhal 1 kg – Rs. 169 (MRP)
– PAYE tax – increase the tax free annual threshold to Rs.2.4 million.
– Nation Building Tax will be increased to 4 percent
– VAT will be revised to 3 bands (0% , 8% and 12.5%)
– Share Transaction Levy (STL) STL will be removed with effect from January 1, 2016.
– Nation Building Tax (NBT)
The present rate of NBT will be revised to 4%.
The present exemptions on the following articles or services will be removed:
– Telecommunication service
– Supply of electricity
– Lubricants

The present threshold will be revised to Rs 3 million per quarter and the threshold
of Rs 25 million per quarter will be removed except for any locally procured
agricultural produce in the preparation for sale. (LBO)