Sri Lanka- Tax Increases

Sri Lanka’s political upheaval and  bankruptcy has  dominated the headlines as of late. The country’s financial crisis has seen the resignation of Prime Minister Mahinda Rajapaksa while his brother, President Gotabaya Rajapaksa still remains in power. However, many have attributed the economic collapse of the country to the sweeping tax cuts implemented when Gotobaya took power in 2019. Levies were scrapped and the VAT rate was all but halved despite the negative effect on revenue. It is then no surprise that Sri Lanka has now announced an increase in the corporate and personal income tax rates from 1 October 2022 and an immediate hike in the value added tax rate from 8% to 12%.