Via the 2021 Budget presented yesterday, the Government announced several tax relief measures to facilitate post-COVID-19 recovery, especially targeting SMEs.
The Government said it will consider the income generated from the supply of Health Protective Equipment and similar products by BOI companies on the request of Ministry of Health and Indigenous Medical Services, Department of Health Services, Tri-Forces and Sri Lanka Police as ‘Deemed Exports’ in order to be eligible for the reduced tax rates applicable for the calculation of the 80% export requirement for tax purposes.
Relief for SMEs included waiver of income tax in arrears payable by the SMEs as defined in the Inland Revenue Act No. 24 of 2017, on the assessments issued up to the year of assessment 2018/2019 by the Commissioner General of Inland Revenue (CGIR), where he is satisfied that there is no fraud or wilful negligence involved in the disclosure of income or any claim for any deduction or relief.
The income tax return furnished by the SMEs for the year of assessment 2019/2020 is proposed to be accepted and additional assessment not to be issued for that year on taxpayers, who furnish the income tax returns for the year and pay the tax declared in the return.
A grace period is proposed to be granted to settle the taxes in arrears/default, as agreed with the Legacy Unit, Default Tax Recovery Unit and the Revenue Administration Management Information System (RAMIS) Unit of the Department of Inland Revenue.
Additionally, the payment and/or submission of the returns of any tax administered by the CGIR, which is due for the period from 1 March to 30 June, is proposed to be treated as paid and/or submitted on the due date if such payment/submission is made on or before 31 December.
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