Feb 12, 2020 (LBO) – Removal of withholding tax on salaries, interest, rent, and dividends is a progressive step for Micro, Small and Medium-sized Enterprises (MSMEs) of the country, said the President of Colombo Chamber of Commerce, Saranga Wijeyrathne.
Commenting on the decision of the Ministry of Finance to advance the removal of WHT from January 2020, the Treasurer Damith Gangodawilage highlighted that the removal of WHT resolved several practical issues faced by citizens and businesses of the Country.
WHT on payment made to a resident person for providing employment, investment (renting of properties, interest on deposits, distribution of Partnership Profits, etc.) and for contract and service payments more than Rs. 50,000/- per month to a resident individual facilitate to develop the business as the compliance burden has been removed.
With the removal of WHT, the Inland Revenue Department has directed banks, financial institutions & employers to refund the WHT and PAYE deducted for the month of January 2020.
As revised, the personal relief (tax-free allowance) of an individual to Rs. 3,000,000/- per annum or Rs. 250,000/- per month effective from January 2020, every individual who earns income from employment, investment, and business above the tax-free allowance shall pay the income tax on a self-assessment basis on every quarter starting from the first quarter of 2020.
Colombo Chamber of Commerce further stated that the total removal of WHT is not the best practice as it causes to erode the tax base of the country.