- Financial VAT collection in Sri Lanka increased over 400 percent in the first quarter of 2025 compared to the previous year.
- Financial VAT is charged on the value added within banks, not directly invoiced to customers.
- Banks raised salaries after a currency crisis and income tax hikes, leading to senior staff leaving for foreign countries.
- Income tax was raised to pay public service salaries, especially for state university graduates.
- State worker salaries increased from April 2025.
- Government tax revenue from banks exceeded shareholder profits in some cases.
- Most net profit is retained as capital to protect depositors.
- Some banks issued stock dividends to boost capital.
- Financial VAT functions similarly to income tax, not directly invoiced like retail VAT.
- Government collected 55.9 billion rupees in taxes from banks in the first quarter, while shareholders received 55.7 billion rupees.
- Banks with more staff may pay higher financial VAT.
- Taxes on financial services included a social security contribution levy introduced after a currency crisis.
Source: economynext.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
