As President Maithripala Sirisena enjoyed a scrumptious lunch in a kehel kole (banana leaf) today, Finance Minister Ravi Karunanayake unveiled a mixed bag of goodies, aimed at tightening the belt of the public by increasing the taxes while also reducing essential items such as green gram, dhal, potatoes, white sugar, LP Gas and Kerosene.
Photo via President’s media director Dharmasri Bandara Ekanayake’s Facebook Page
Delivering the annual budget speech in Parliament this afternoon, Karunanayake announced an increase the Telecommunication Levy on internet services by 25%, despite his government initially promoting the use of internet prior to elections last year, by way of promising to provide free Wi-Fi across the country, which is yet to be realized.
He also proposed for a SIM activation levy of Rs. 200 to be imposed from next year, due to the large number of SIM cards sold monthly. According to Karunanayake, more than 150,000 SIM cards are sold in Sri Lanka monthly. “Annual Spectrum License Fee (ASLF) has not been revised for a considerable period of time. Hence, I propose to increase the Annual Spectrum Licensee Fee by 25 percent, with effect from January 1, 2017,” he said.
Karunanayake also said that the Annual Spectrum License Fee (ASLF) has not been revised for a considerable period of time, hence he proposed the increase the Annual Spectrum Licensee Fee by 25 percent, with effect from January 1, 2017.
In support of the country’s digitalization process, all mobile telephone operators will be given a 6 months period to convert their infrastructure to provide at least 3G coverage. Any operator who failed to implement within this period will be liable for a surcharge of Rs.100 million per District. All metro areas are required to be converted to 4G by 30th June 2018, according to the Finance Minister.
He also proposed to introduce the Excise (Special Provisions) Duty on the importation of beer can at the rate of Rs.10 per can of not more than 325 millilitre and Rs. 15 per can of more than 325 millilitre. Further, Custom Duty (CD) on the importation of powdered milk will be increased from Rs.500/- to Rs.800/- per liter on the importation of potable alcohol.
He also insisted that the Ceylon Tobacco Company donate Rs. 500 million to the Presidential Fund to be utilized by the Presidential Task Force for the antismoking campaign from next year.
Meanwhile, the corporate income tax rate has been proposed to be revised to create a three tier structure of 14 percent, 28 percent and 40 percent. Income tax rate applicable on liquor, tobacco, betting and gaming, etc. will be continued at the rate of 40 percent. SMEs, Exporters of goods and services, Agricultural sector and Education sector will be subjected to the lower rate of 14 percent. All others including banking, finance, manufacturing and trading will be subjected to income tax at 28 percent. Income tax rate of 10 percent currently applicable on funds, dividends, treasury bills and bonds will be increased to 14 percent. The SME category will be redefined in a rationalized manner.
With Holding Tax (WHT) on interest income will be increased to 5 percent from the present level and the exemption applicable on savings account with less than Rs. 60,000 per annum will be removed. WHT will be re-introduced on specified fees where the payment exceeds Rs. 50,000 per month. Interest income of senior citizens up to Rs. 1.5 million per annum, which is Rs. 125,000 per month will be exempted from income tax.
Read the budget speech in full here