Pay As You Earn (PAYE)

This is an income tax assessed on the earnings of an employee.According to the tax law, if a person earns more than 250,000 rupees per month, this tax has to be paid.

Here the employer supervises the withholding of tax paid with the permission of the employee as a grant.And every time salary is paid;  They must remit the deduction to the Inland Revenue Department.

Each employee's pay sheets include the amount of PAYE tax that is withheld from them.

The  below table shows how you pay PAYE tax based on your salary.

Epf

In this tax includes both groups of employees and employers.Here, both employers and employees have to contribute a pre-determined amount of their monthly compensation i.e. 12% of the employer's salary and 8% of the employee's salary to the EPF established by the government.

ETF

Apart from Employee Provident Fund, there is another levy called Employee Provident Fund.Here, employers are obliged to pay a pre-determined amount of each employee's monthly salary, which is currently 3% of the salary, to the Employees' Provident Fund established by the government.

When an employee retires, resigns, or is laid off after more than five years of service, the employer is required to pay half-salary months Employees for each additional year of service.


Tourist Development Levy

In here, every person licensed under the Tourism Development Act, for example establishments such as tourist hotels, must pay a 1% tourism development tax based on the gross income of their establishment.


6. Local taxes

  Local governments currently assess and collect taxes annually from owners of land and establishments depending on the area where the property is located.

These authorities collect annual license fees from several enterprises based on the annual gross receipts of several industries such as hotels.


Vat

VAT is payable on both wholesale and retail trade and supply of goods including services.  Depending on certain conditions, provision is made for filing returns on monthly or quarterly basis for payment of tax.A VAT-registered individual must make the tax payments on a monthly basis, even in situations when quarterly reports can be submitted. The only exceptions are a few particular imports and products and services produced domestically.

VAT is due on the prescribed values of imported products and domestic goods at a standard rate of 12%. Exports and a few certain international services are exempt from taxation.

Along with the zero-rated supplies, any service offered by a hotel, guest house, restaurant, or other business of a similar sort that is registered with the Sri Lankan tourist board authority and utilizes 60% local inputs is also regarded as a zero-rated supply.

Based on the item's worth, customs duties are calculated (i.e., transaction value). The WTO's guidelines for customs valuations are implemented.


Custom duties

Sri Lanka uses a streamlined tariff structure with three tiers.Customs duties are assessed based on the value of the goods i.e. transaction value.The relevant prices are published in the Government Gazette and WTO regulations on customs valuation are implemented.

Excise duty

Cigarettes, liquor, tobacco, selected petroleum products, motor oil, paints, dishwashers, air conditioners, household washing machines and other products are subject to excise duty and special excise duty at various rates and unit rates.