President Anura Kumara Dissanayake announced a series of key economic and tax reforms during a statement in Parliament today (18), outlining his government’s vision for the country’s financial stability and growth.

The President attended today’s parliamentary sittings, after he returned to the island from the official three-day visit to India.

Addressing the House, he revealed the government’s aim to increase Sri Lanka’s foreign exchange reserves to USD 15.1 billion by 2028, expressing confidence that his administration will remain in power to achieve this target. The President also assured that the economic crisis experienced in 2022 would never be repeated under his leadership.

Highlighting recent agreements with the International Monetary Fund (IMF) during the third review of the Extended Fund Facility (EFF), the President announced changes to the tax structure, including:

• Increasing the Pay As You Earn (PAYE) tax exemption limit from Rs. 100,000 to Rs. 150,000.
• Revising the first bracket of personal income tax from Rs. 500,000 to Rs. 1 million, taxed at 6%.
• Adjusting the Withholding Tax from 5% to 10%.
• Reducing the tax on services exports from 30% to 15%.

Explaining the PAYE revisions, President Dissanayake noted that higher relief would be provided to low-income earners. For example:

• Salaries of Rs. 150,000 per month are now fully tax-exempt.
• Salaries of Rs. 200,000, Rs. 250,000, and Rs. 300,000 are partially exempt, with tax relief of 71%, 61%, and 47%, respectively.

The President emphasised that these measures would ensure greater fairness, offering more relief to lower-income earners while maintaining higher contributions from those earning more.

President Dissanayake also announced the government’s decision to permit vehicle imports for personal use starting from 1 February 2025, signaling a relaxation of restrictions that had been in place during the economic crisis.

Expressing optimism for the future, he affirmed his government’s determination to continue driving the country’s recovery and building a resilient economy. “We are confident the hardships of 2022 will not recur,” he declared.