Minister Bimal Ratnayake has indicated that the government intends to provide further relief on Pay-As-You-Earn (PAYE) tax in the upcoming Budget, saying the current burden on professionals remains high.
Speaking during a television interview, Ratnayake acknowledged that PAYE remained a concern for professionals despite changes already introduced by the government.
“We accept that the PAYE tax is high for professionals,” Ratnayake said. “There is a limit to how much we can reduce it because, on one side, there is the agreement with the IMF and, on the other, there is the country’s fiscal position.”
However, he said the Finance Ministry was operating on the policy position that further PAYE relief should be provided.
“The Finance Ministry is of the view, as a matter of policy, that relief should be given on PAYE. There are only a few more days [until the Budget],” he said, indicating that further relief could be announced.
Ratnayake did not specify a new tax-free threshold or the scale of the proposed relief.
During the interview, he also said the government believed the current VAT burden was high, but stopped short of committing to a VAT reduction in the upcoming Budget, saying any changes would depend on the country’s overall economic and fiscal position.
He defended the government’s revenue collection, saying it had not introduced new taxes and had instead increased compliance while reducing wasteful expenditure.
The government has also emphasised maintaining fiscal discipline as Sri Lanka continues its current IMF-supported programme. (Newswire)
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