Advance Income Tax (AIT) deductions from interest payments with effect from January 1, 2023

Jan 04, 2023

In terms of Section 84A(1A) of the Inland Revenue Act No. 24 of 2017 as amended by the Inland Revenue (Amendment) Act No 45 of 2022 (‘the Act’), and as guided by circulars issued by the Inland Revenue Department of Sri Lanka (‘IRD’) to banks and financial institutions from time to time, an Advance Income Tax at the rate of 5% is required to be mandatorily deducted from payments of any amounts as interest payable by Dialog Finance PLC (‘the Company’) to any deposit holder with effect from 1st of January 2023.

AIT will be deducted at the time where the relevant interest is paid, credited, re-invested, accumulated, capitalized or made available to the depositor; as the case maybe; by the Company in making such payments. The Company shall provide the AIT certificate in soft copy format issued to the depositor’s registered email within 30 days after the end of the month that the AIT is deducted. However, if the deposit holder requires a printed AIT certificate such request may be emailed to us via financialservice@dialog.lk.

The Company is not required to deduct AIT on following income tax exempted interest payments for amounts derived by;

The Government of a foreign country of foreign territory to the extent specified under a diplomatic immunities law or similar law;
An international organization to the extent specified under a diplomatic immunities law or similar law or an agreement between the organization and the Government of Sri Lanka, provided that the exemption provided under the agreement shall be broader than that provided under diplomatic immunities law or similar law.

Other persons and institutions whose interest is exempted from income tax in terms of the provisions of the Act, shall obtain and submit to the Company an interest exemption confirmation letter from the Commissioner General of the Inland Revenue (‘CGIR’), prior to the AIT deduction by the Company. As per the IRD, the relevant confirmation letter is said to be issued by the Commissioner of Customer Supporting and Promotion Unit of the IRD ( Address: 2nd Floor, IRD Sri Lanka, Sir Chittampalam A Gardiner Mw, Colombo 02 Telephone: 0112134250 email: csp@ird.gov.lk) on behalf of the CGIR

Link to the Amended Act.