UTO Edu Consult holds seminar on new Inland Revenue Act No. 24 of 2017

A seminar in relation to the new Inland Revenue Act was conducted at the Ramada Hotel on 1 November by UTO Edu Consult Ltd. 

Addressing the seminar, KPMG’s Tax and Regulatory Principal Suresh R.I. Perera clarified the change of the scope of the definition of “Residency” under the new Inland Revenue Act.  The concept of residency is important to ascertain the tax liability as a resident is liable for both locally sourced income as well as income from foreign sources. 

However, a non-resident is liable only for income stemming from Sri Lankan sources and does not have to pay taxes on their foreign income. This simple definition in the current Act, where a person is considered resident if a person is physically present in Sri Lanka for more than 183 days during the year of assessment, will undergo a change with the implementation of the new Act from 1 April 2018. He proceeded to explain the new definition with the help of examples. 

Perera’s presentation extended to cover the new rules pertaining to employment taxes and individual taxation. Employees will have a higher tax-free allowance of Rs. 1.2 million compared to professionals in practice and the self-employed who will continue to enjoy a tax-free allowance of Rs. 500,000 under the new Act too. 

However, all three categories will be subject to the same progressive tax slabs and tax rates. The maximum tax rate for all individuals will be 24% and tax slabs will be Rs. 600,000 each.

The presentation covered the concept of income tax on the realisation of assets and liabilities in detail.  Rules pertaining to corporate taxes and administration provisions were also clarified.