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VAT slashed to 8% from 15% from December

Local News Update: The Cabinet approved the removal of the Nation Building Tax (NBT), Pay As You Earn (PAYE) Tax and Withholding Tax on Interests, the Speaker of the Co-Cabinet Ministers Bandula Gunawardana said today. He mentioned this during the first press briefing to announce the decisions of the new Cabinet of Ministers of Government. The Cabinet has further decided to reduce the telecommunications levy to 25 percent. These decisions were taken at the Presidential Secretariat’s first Cabinet meeting of the newly formed government this morning (27).

The Ministry also decided to reduce the Value Added Tax (VAT) from 15% to 8%. The VAT ceiling has been raised to Rs. 25 million turnover per month from existing Rs. 1 million, added the Co-Cabinet spokesman. Meanwhile, the income tax on the construction industry has also been reduced from 28% to 14%. The Cabinet also announced that all religious places are exempt from taxes.

President Rajapaksa vowed to remove Pay As You Earn (PAYE) and Withholding taxes during the election campaign and amend the existing Inland Revenue Act to remove the heavy tax burden on the general public. He also vowed to slash VAT to 8 percent and reduce the manufacturing sector’s income taxes and to exempt religious sites from all taxes.

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