Programme for Economic Revival His Excellency the President, and the Honorable Prime Minister and Minister of Finance and and Econ Econom omic ic Affa Affair irss have have rais raised ed conc concer erns ns rega regard rdin ing g the the seri seriou ouss setb setbac ack k in the the economy as reflected in the persistently low growth rates during the last 3 years along with with the the risi rising ng cost cost of livi living ng.. The The Hono Honora rabl ble e Prim Prime e Mi Mini nist ster er is of the the view view that that illillconceived economic and financial policies of the previous Government have led to this situation by marginalizing localentrepreneurs, industries and domestic production. As 2018/ 2018/201 2019 9 Maha Maha cultiv cultivati ation on season season has begun begun with with extrem extremel elyy favora favorable ble weath weather er throughout the country, the economy is set to get a new revival as all hydro power rese reserv rvoi oirs rs and and irri irriga gate ted d sche scheme mess have have reac reache hed d full full stor storag age e capa capaci city ty to gene genera rate te electrici electricity, ty, provision provision of drinking drinking water and water water for cultivation cultivation.. The Government Government thinks that this is the best opportunity to prepare the country to get the maximum benefit from from agric agricult ultura urall produc productio tion. n. At the same same time time the consum consumers ers are saddl saddled ed with with high high cost cost of livi living ng.. In this this back backgr grou ound nd the the Prim Prime e Mi Mini nist ster er and and Mi Mini nist ster er of Fina Financ nce e and and Econom Economic ic Affair Affairss has given given direc directio tion n to im impl pleme ement nt follow followin ing g initi initiati ative vess to reviv revive e the economy. 1. In order to ease the pressure pressure on high cost cost of living living while also also protecting protecting the local local farm farmer er,, Spec Speciial Com Commodi modity ty Levy Levy will will be redu reduce ced d on Dhal Dhal by Rs.5 Rs.5 per per Kg, Kg, Chickpeas by Rs. 5 per Kg, Black gram by Rs.25 per Kg. Customs Duty will also be waived on Wheat grain to Rs. 9 per Kg from the existing waiver of Rs.6 per Kg. Sugar will be brought under the Special Commodity Levy whereby the applicable taxes on Sugar will also be reduced by Rs.10 per Kg. Accordingly, the commodity prices will be reduced with immediate effect. 2. Give Given n the the im impa pact ct of fuel fuel pric pricin ing g on all all stra strata ta of the the soci societ etyy spec specia iall llyy thos those e engaged in transport, agriculture and fisheries sectors, price of Petrol (Octane 92) will be reduced by Rs. 10 per litre, Auto Diesel by Rs.7 per litre and Lubricants including the 2T lubricants used in three-wheelers and small agricultural engines by Rs.10 per litre with effect from mid night today.At the same time a cost based pricing mechanism will be implemented on fuel in place of the monthly fuel price formula. 3. A guaran guarantee teed d price price schem scheme e will will be intro introduc duced ed for Paddy, Paddy, Onion Onion and Potatoe Potatoess prod produc uced ed local ocally ly by our our farm farmer ers. s. Acco Accord rdin ingl gly, y, SCL SCL will will be rais raised ed duri during ng harvesting period to protect farmers through remunerative guaranteed prices. As
potatoes potatoes and B-Onions B-Onions are being being harvested, harvested, SCL on potatoe potatoess and B-Onions B-Onions will will be maintained at Rs.40 per Kg. 4. In order order to mi mitig tigate ate the impacto impactoff advers adverse e weathe weatherr condi conditio tions ns which which result resulted ed in farmersl farmerslosin osing g their livelih livelihood ood and becomin becoming g heavilyi heavilyindeb ndebted, ted, interest interest and the penal interest incurred by farmers and small Paddy Mill owners on loans up to a maximum of Rs.50 million, from all Commercial Banks during the past 3 years, will be written off in full and will be borne by the Government. 5. The maximum maximum threshold threshold on Loan advances advances given given by Samurdhi Samurdhi Banks to Samurdhi Samurdhi beneficiaries to support their livelihood activities will be increased by Rs.10,000/-. 6. Fertil Fertilize izerr price pricess for paddy will be maint maintain ained ed at Rs.500 Rs.500/5 /50kg 0kg bag and ferti fertili lizer zer prices for other crops will be reduced to Rs. 1,000/50kg bag from Rs. 1,500/50kg bag. 7. The concessi concessionary onary income income tax rate of 14% on agricultu agriculture re is presently presently applied applied only for the companies engaged in agricultural businesses. The income of individuals from Agricultural undertakings will also be reduced from the existing maximum rate of 24% to 14% so that individual farming agriculture is also encouraged. 8. The concessio concessionary nary Income Income Tax rate of 14% is presently presently applicable applicable under the SME categories only for Companies. This rate will be extended to include individuals including those providing professional services.Therefore,the income tax rate for professional services will be reduced from 24 percent to 14 percent. 9. Withhold Withholding ing tax will be exempted exempted on Interest Interest on any savings savings and fixed deposits deposits maintained in any financial institution. 10. To encour encourag age e local local entre entrepre preneu neurs, rs, profes professi siona onals ls and mi migra grant nt worker workerss to remit remit their earnings in foreign currencyon services provided outside Sri Lanka, Income tax will be exempted on such remittances. 11. 11. The The adve advers rse e im impa pact ct crea create ted d by high high indi indire rect ct taxe taxess will will be mi miti tiga gate ted d by simplification of VAT and NBT. The VAT threshold will be increased from Rs.12 million per annum to Rs.24 million per annum.
12. The thresho threshold ld for the VAT liabili liability ty of whole wholesal sale e and retail retail secto sectorr also also will will be increa increase sed d from from Rs.50 Rs.50 mi milli llion on to Rs.100 Rs.100 mi mill llion ion per twelv twelve e months months provid providing ing benefits to small traders and businesses. 13. The VAT rate appli applicab cable le on the im impor portt of Sawn Tim Timber ber will be reduc reduced ed to 5% to support the local Construction Industry. 14. 14. VAT VAT on im impo port rt of fabr fabric ic will will be exem exempt pt prov provid idin ing g bene benefi fits ts to the the smal smalll and and medium garment manufacturers. 15. 15. Cons Consid ider erin ing g the the high high tax tax im impo pose sed d on the the Tele Teleco comm mmun unic icat atio ion n serv servic ices es,, the the Telecommunication Levy of 25% will be reduced to 15%. The thrust if these initiatives are to encourage production and simplify the tax system. It will will certai certainly nly help help househ household oldss with with additi additiona onall incom income e in their their hands. hands. Thepro Thepropos posed ed changes to the tax system will also encourage inward remittances and savings. The Govern Governmen mentt also also expect expectss to reduce reduce its expend expenditu iture re with with the ration rationali alizat zatio ion n of Cabinet ministries as reflected in a lessor number of ministries and reexamination of capi capital tal expe expend ndit itur ure e prog progra rams ms.. Acco Accord rdin ingl gly, y, the the gove govern rnme ment nt is conf confid iden entt that that the the primary surplus of 1.8 percent of GDP and the budget deficit of around 4.9 percentof GDP that have been targeted for 2018 could be achieved in support for further fiscal consolid consolidation ation to provide provide economi economicc stability stability.. The measures measures to further further consolid consolidatio ation n of extern external al trade trade and payme payment nt transa transacti ctions ons are also also being being exami examined ned to provi provide de much much needed stability to the exchange rate. His Excellency the President and Honorable Prime Minister and Minister of Finance and Econom Economic ic Affai Affairs rs have have direct directed ed the im impla planta ntatio tion n of the above above policy policy me measu asure res. s. The necessar necessaryy Gazettes Gazettes for the aforemention aforementioned ed tax related proposals proposals will be issued issued today today and Cabinet approval is sought to amend the necessary tax laws.
Ministry of Finance and Economic Affairs 01.11.2018
