The Cabinet has given its approval to remove the Nation Building Tax (NBT), Pay As You Earn (PAYE) Tax and Withholding Tax on interests, the Co-Cabinet Spokesperson Bandula Gunawardena said today.
He mentioned this during the first press briefing to announce the decisions of the new government’s Cabinet of Ministers, held at the Department of Government Information this evening.
He also said that the Cabinet has further decided to reduce the telecommunications levy by 25%. Thereby the current telecommunications levy of 30% has been reduced to 5%.
These decisions were taken during the first Cabinet meeting of newly formed government held this morning (27) at the Presidential Secretariat.
The Cabinet of Ministers also decided to cut the Value Added Tax (VAT) from 15% to 8%. The ceiling for VAT has been raised to Rs. 25 million turnover per month from existing Rs. 1 million, the Cabinet co-spokesperson said further.
In the meantime, the income tax on the construction industry has also been reduced from 28% to 14%.
The Cabinet also announced that all religious places are exempted from taxes.
Minister Gunawardena charged that the economy had collapsed under the previous government and that interest rates have sky-rocketed.
Therefore the new government has decided to abolish some taxes and also to reduce VAT from Dec. 1 to boost economic activities, he said.
Sweeping tax cuts and removals were leading election pledges in the manifesto launched by President Gotabaya Rajapaksa in view of the recently held presidential election.
During the election campaign, President Rajapaksa vowed to remove Pay As You Earn (PAYE) and Withholding taxes and amend the existing Inland Revenue Act in order to remove the heavy tax burden imposed on the general public.
He also vowed to slash the VAT to 8% and reduce the income taxes for the manufacturing sector and to make religious places exempt from all taxes.