Tax changes hit lower rung of wealthy hardest - PWC | Daily News

Tax changes hit lower rung of wealthy hardest - PWC

The recently announced IRD tax amendments would have the most significant impact on the lower rung of the top 5% of households in the country.

Accordingly, individuals earning Rs 300,000 a month shall see their taxes rise over 10 times from Rs 3,000 to Rs 35,000.

Comparisons against tax regimes before 2019 would show that though the tax rises are significant, they are not as stark or disproportionate towards the lower rung of the pool of elite households.

Higher-income individuals will also see significant rises in taxes paid with people making Rs 1 million paying Rs 286,000 as opposed to Rs 90,000 previously.

PWC Partner Charmaine Tillekeratne noted this in a webinar held on 14 October discussing the recent changes to the tax code. The comparison however only works against the previous tax regime wherein there were huge tax breaks given to the wealthiest households in the country.

The change in tax regime would put Sri Lanka in line with developed countries in terms of tax protocol and further allow the state to downwardly adjust regressive taxes like Value Added Tax over the medium term.

Expenditure relief which was previously Rs 600,000 has been taken away in the subsequent six-month period.

Tillekeratne said, “Where your retirement benefits have been taxed in the previous year of assessment then they would not be taxed at the point of receiving these benefits at the point of termination.”

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