Specific Taxes in Sri Lanka
Sri Lanka's tax landscape extends beyond corporate and personal income taxes, encompassing a diverse range of specific taxes that contribute to the country's revenue and serve various policy objectives. These taxes include:
Value-Added Tax (VAT)
VAT is a consumption tax levied on the sale of goods and services. It is a comprehensive tax that applies to most business transactions, with a standard rate of 15%. Certain essential goods and services are exempt from VAT, while some are subject to a reduced rate of 8%.
Nation Building Tax (NBT)
NBT is a tax levied on the import of goods and services. It is calculated as a percentage of the customs value of the imported goods or services. The NBT rate varies depending on the type of goods or services imported.
Stamp Duty
Stamp duty is a tax levied on various legal documents and transactions, such as property transfers, share transfers, and certain contracts. The rate of stamp duty varies depending on the type of document or transaction.
Property Tax
Property tax is an annual tax levied on the ownership of immovable property. The tax is based on the assessed value of the property, and the rates vary depending on the location and type of property.
Environmental Taxes
Sri Lanka imposes environmental taxes on activities that cause environmental harm, such as emissions, waste disposal, and the use of natural resources. These taxes aim to internalize the costs of environmental damage and encourage sustainable practices.
Betting and Gaming Tax
Betting and gaming tax is levied on the gross revenue of betting and gaming operators. The tax rate varies depending on the type of betting or gaming activity.
Telecommunication Levy
Telecommunication levy is a tax levied on the revenue of telecommunication service providers. The tax rate is a percentage of the gross revenue.
Taxpayers Subject to Specific Taxes
The categories of individuals or entities liable for each type of tax vary depending on the nature of the tax. For instance:
- VAT is payable by businesses engaged in the supply of goods and services.
- NBT is payable by importers of goods and services.
- Stamp duty is payable by parties involved in transactions subject to stamp duty.
- Property tax is payable by property owners.
- Environmental taxes are payable by companies and individuals engaged in activities with environmental impacts.
Purpose and Rationale
The specific taxes in Sri Lanka serve diverse purposes, including:
- Generating revenue for the government to fund public expenditure and services.
- Regulating economic activities and discouraging harmful practices.
- Promoting sustainable practices and protecting the environment.
- Redistributing wealth and ensuring fairness in the tax system.
Legal Framework
The legal framework for specific taxes in Sri Lanka is established by various statutes and regulations, including:
- Value Added Tax Act, No. 14 of 2002
- Nation Building Tax Act, No. 9 of 2009
- Stamp Duty Act, No. 2 of 1909
- Property Tax Act, No. 13 of 1978
- Environmental Protection Levy Act, No. 56 of 2018
- Betting and Gaming Levy Act, No. 40 of 1988
- Telecommunication Levy Act, No. 15 of 1996
These legal texts outline the obligations, rates, and procedures for the collection and enforcement of specific taxes in Sri Lanka.
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