• Govt. aims to balance tax relief with IMF targets
• Minimum threshold to be increased, tax slabs to be adjusted

Sri Lanka will amend the Pay-As-You-Earn (PAYE) tax in two stages in 2025 as the government is focused on achieving the International Monetary Fund’s (IMF) tax revenue target of 15% of GDP, Cabinet Spokesman Nalinda Jayatissa said.

Speaking at an interview with DeranaTV on Monday (9), he said that the proposed relief to the PAYE tax might come in two stages in a short time period within the next year.

He said the minimum threshold will be increased in the PAYE tax structure while changes will be made within the tax slabs.

The National People’s Power (NPP) policy statement states that the government will increase the minimum threshold of the PAYE tax from Rs. 100,000 to Rs. 200,000 to provide relief to middle-income earners in the country.

Jayatissa said that stage one of the amendments to the PAYE tax will be announced very soon while the other stage will be announced in the budget due in February.

“As a result of the ongoing discussion with the IMF, some relief can be provided, we need to make amendments to VAT and PAYE but while doing those, on the other hand, we should maintain government tax revenue at 15% of GDP,” he added.

He said that the government did not agree to the Imputed Rental Income Tax proposed to be implemented to improve government revenue.

Further, he said that the government will go the maximum distance possible to provide tax relief in the VAT and PAYE tax in the upcoming budget.

Jayatissa said that the government will bring the VAT on certain essential food items from 18% to 0% in the budget due in February.

Sri Lanka is set to achieve its 13.6% of GDP target in tax revenue in 2024 and while it has to go for 15.1% GDP target in 2025 to maintain debt sustainability.