Number of registered taxpayers decline by 35% | Daily News

Number of registered taxpayers decline by 35%

Sri Lanka saw its tax base from 2019 to 2020 decline with 33.5% decline reported in the number of registered taxpayers both corporate and individuals in the country, mainly attributed to major changes in tax policy introduced in December 2019, particularly the increase in thresholds for Value Added Tax (VAT) and the abolition of Pay As You Earn (PAYE) tax.On January 1, 2020, the mandatory PAYE Tax on any employment receipts to any resident or non-resident person was removed and on April1, 2020 was replaced by the Advance Personal Income Tax (APIT) which is an optional scheme, according to public finance.lk.

The tax-free threshold for personal income tax was also increased from Rs 500,000 per annum to Rs 3,000,000 per annum, reducing a large number of tax payers from Sri Lanka’s tax base. “Further on January 1, 2020, the threshold for VAT registration was increased from Rs 12 million per annum to Rs 300 million per annum and an exemption for VAT was provided to the information technology and enabling services.

With the abolition of PAYE employees are expected to file their own income tax returns if their annual income is above the tax-free threshold. However, the increase in individual income tax files between 2019 and 2020 was just 11,607, which is insignificant when compared to the decline in PAYE/APIT registered taxpayers of 485,055.”


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