Colombo, Dec 19: President Anura Kumara Dissanayake on Wednesday announced that Sri Lanka has achieved flexibility with the IMF on its rigid state revenue tax regime, something that was part of his election promise.
Also, import of private cars — banned from 2020 — would be allowed from February 2025, Dissanayake, who is also the Minister of Finance, told the parliament.
Speaking about the agreements reached with the International Monetary Fund (IMF) during its third review of the USD 2.9 billion Extended Fund Facility (EFF), the president said his government has been able to raise the tax threshold.
“We have been able to raise the tax threshold of pay as you earn (PAYE tax) so that those who have bigger incomes pay more while those who earn pay less,” Dissanayake said, adding there would be other VAT exemptions and withholding tax on interest incomes for the retired.
“An income of Rs 1,50,000 per month will be tax free,” Dissanayake said referring to the current free amount upto only Rs 1,00,000.
Fresh from his return from an official visit to India, Dissanayake said the ban on vehicle imports would be gradually lifted.
“From December 14, we have allowed the importation of the first category – vehicles for passenger transport and cars for special purposes.”
From February 2025 all imports of private cars would be allowed.
Sri Lanka had stopped vehicle imports from 2020 during the Covid19 outbreak due to the dwindling foreign reserves.
With the economic recovery through the IMF bail out since 2023, the IMF had allowed vehicle imports by preventing any adverse impact on the need to build forex reserves.