Wednesday, 13 September 2017 06:27

Hospital bills to go up

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Patients may find their hospital bills increasing due to the Government more than doubling the taxes on private healthcare institutions from 12% to 28% under the new Inland Revenue Act (IRA) passed by Parliament last week.

Key sectors where the rate of tax is increased from 10% or 12% to 28% are the construction and healthcare services, warehousing, agro processing, animal feed and fishing and clubs and associations, Ernst & Young (E&Y), an audit firm said.

The previous lower tax regime, where taxes on companies ranged from between 10-12%, like those belonging to the SME sector, has been abolished. Instead, there will be a three tier tax rate for companies comprising 14%, 28% and 40%, E&Y said. The 28% and 40% company tax slabs had been on board previously, what is new is the 14% tax regime, replacing the previous, 10 and 12% low tax regimes. Some of the other salient points in the new Act are no tax on share trading and no tax holidays. Taxes on the sale of land (real estate) and buildings will be 10%. In the case of IT companies, only 35% of the employee benefits, other than those of directors, will be considered as taxable income. Further, interest income on sovereign bonds denominated in foreign currency accruing to non resident persons or licensed commercial banks in Sri Lanka will be tax exempt. Further, the tax exemption from the export of services has been abolished. Also abolished are tax exemptions on interest and gain from sale of sovereign bonds and Sri Lanka development bonds and buying from one country and exporting to another country.

Also abolished is withholding tax (WHT) on government securities (Treasury (T) Bills and T Bonds) which were previously taxed at 10%. However, WHT on quoted corporate debt securities which was previously exempt, have been slapped with a 5% tax.
Nonetheless, WHT on unquoted corporate debt securities, which was previously at 10%, has been reduced to 5%. WHT on rent income which was previously non taxable will now be taxable.WHT on foreign dividend receipts which were previously exempt will now be taxed at 14%. Further, investments exceeding US$ 3 million in the Northern Province may be claimed as a capital allowance of up to 200% and in the case of other provinces, 100%. And, investments of over $ 100 million in other provinces may claim a capital allowance of 150%.

(Ceylon Today)

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