Sri Lanka: Selected Issues and Statistical Appendix

International Monetary Fund

doi:10.5089/9781451823516.002.A005

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Sri Lanka: Selected Issues and Statistical Appendix

Author: International Monetary Fund

Publication Date:: 26 Sep 2002

eISBN:: 9781451823516

ISBN:: 9781451823516

Language:: English

Keywords:: ISCR; CR; savings-investment balance; deficit; debt ratio; GDP; a number of trade tax reform; exemption threshold; stamp duty; Value-added tax; Excises; Tax administration core functions; Corporate income tax; Consumption taxes

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This Selected Issues paper focuses on the fiscal position of Sri Lanka. The standard analysis shows that, prior to the adjustment announced in the 2002 budget, fiscal policy was clearly unsustainable, leading to a rising debt-to-GDP ratio. The paper looks at external debt and complements the analysis of the public debt dynamics. The baseline scenario shows that debt ratios decline significantly in the medium term, as a result of strong growth founded on renewed peace and political stability, far-reaching structural reforms, and stable macroeconomic conditions.

Abstract

V. Tax Policy Developments, 2002³⁸

1. The government embarked on a major reform of tax policy in 2002, aimed at making the tax system simpler and more transparent. Prior to this, the tax system was becoming increasingly complex: the authorities yielded persistently to pressure for exemptions and resorted to ad hoc initiatives, an ever narrower tax base, and an array of different taxes, often on the same transaction. Consequently, tax administration became increasingly difficult. These developments led the revenue-GDP ratio to decline by 4 percentage points between 1995-2001. The new government recognized that urgent tax reform was needed. Most of the reforms announced in the budget (March 22, 2002) are consistent with the recommendations of a November 2001 FAD technical assistance report.

A. Value Added Tax

2. Before the recent reform, Sri Lanka operated parallel taxes on goods and services. The Goods and Services Tax (GST), was a tax on value added. Its single rate was 12½ percent, although its efficiency was hampered by wide-ranging exemptions. The National Security Levy (NSL) was a cascading turnover tax, with a 6½ percent rate including a 25 percent markup for imports. It had a wide base with few exemptions.

3. The government announced that these two taxes would be eliminated, and replaced by a dual rate VAT. There would be two rates: 20 percent and 10 percent, with the lower rate designed to cover those goods and services which had been subject to NSL, but exempt from GST. This category includes petroleum products, electricity exceeding 30 kwh, fertilizer, water, and most basic foodstuffs (including coconut poonac, tea, spices, eggs, coconut oil, potatoes, onions, chilies, lentils, powdered and condensed milk, dried fish, Maldives fish, and sugar).³⁹ The exempt category would still include a number of basic food items-unprocessed agricultural goods, unprocessed farm or poultry products, desiccated coconuts, rice, rice flour, wheat, wheat flour, bread, liquid milk, and infants milk powder-as well as crude petroleum, kerosene, financial services, public transportation, electricity below 30 kwh, gems, health services, and medical equipment.⁴⁰ The budget speech also announced the intention of the authorities to extend the VAT to the retail sector in 2003. Based on a June 1 introduction, the authorities anticipated a small (Rs 3.5 billion) revenue gain from replacing with GST and NSL with the VAT. The aim of the reform was not to raise significantly more revenue, but to simplify the tax system and broaden the VAT base.

4. The VAT was not introduced as planned on June 1, 2002. The authorities decided to wait until July, so as not to burden taxpayers and the tax administration with both GST and VAT quarterly returns. The introduction was postponed further, as a consumer group issued a court challenge to the new tax. After minor modifications to the law, the VAT was introduced on August 1. The two month delayed led to an estimated revenue loss of Rs 1 billion.

5. The authorities also made some changes to the schedules. A number of goods-eggs; pharmaceutical products; spices; bunker and aviation fuel; and agricultural tractors and equipment-were removed from the 10 percent schedule to the exempt schedule. Another group of goods had their rate lowered from 20 percent to 10 percent; these include motor bikes and bicycles, poultry feed and prawn feed, unprocessed meat and chicken; CFL and solar batteries; professions and vacations; leasing; goods transport; LP gas; and agricultural tractors and equipment. The estimated loss from these additional changes is Rs 0.8 billion.

B. Individual Income Tax

6. The budget introduced a number of reforms aimed at simplifying the personal income tax system. The personal income tax bands were reduced from 4 to 3; the two middle bands of 15 percent and 25 percent were merged into a 20 percent band, while the upper and lower bands remain unchanged at 35 percent and 10 percent respectively. The tax exemption threshold was raised from Rs 144,000 to Rs 240,000. The tax threshold for retirement benefits was also raised; from Rs 500,000 to Rs 1,000,000. However, the government opted not to extend income taxation to civil servants, but left the option open for 2003. The medium-term strategy is to eliminate the top band and reduce the top personal tax rate to 20 percent by 2004. The Save the Nation Contribution, an income tax surcharge, was eliminated prior to the budget by the previous government, toward the end of 2001.

7. A number of other changes were made. For individuals, the 10 percent tax on interest earnings was made a final withholding tax. Similarly, individuals’ dividend income became subject to a 10 percent final withholding tax. A 10 percent withholding tax was also introduced on nonresidential rent above Rs 500,000 per year.

C. Corporate Income Tax

8. The budget also announced plans to simplify the corporate tax regime, based on a uniform low rate. The government eliminated the 20 percent corporate income tax surcharge and announced plans for a low general rate in the medium term. Specifically, the rate will be reduced from 35 percent to 30 percent in 2003, and again to 20 percent in 2004. Given that many enterprises enjoying tax holidays receive long–term concessional corporate tax rates upon expiration of the holiday, reducing the standard rate was seen as a way of to level the playing field. The 20 percent rate was introduced this year for companies with taxable income below Rs 5 million. The Advance Corporate Tax and the capital gains tax were also eliminated. The provisions allowing accelerated depreciation over two years were maintained, and reduced to one year for investment in information technology and software.

9. The budget proposed to rationalize, but not eliminate, tax incentives. While honoring all existing commitments, the government committed to grant no new exemptions under either the Board of Investment (BOI) or Inland Revenue department (IRD) regimes. There are two exceptions to this policy, however. First, limited incentives will be allowed for a number of sectors—including nontraditional exports, agriculture, information technology, electronics, industrial and machine tool manufacture, and food processing—as well as for “other designated enterprises” and investments in excess of Rs 500 million in specified industrial and agricultural services. These incentives will take the form of a three year tax holiday, a concessionary 10 percent rate for two years, followed by the standard 20 percent rate. Second, there will be 5-10 year tax holidays for “pioneering investment” in power generation, transmission and distribution and the development of highways, seaports and airports, railways and water services. These enterprises will be taxed at 15 percent upon expiration of the tax holiday.

D. Taxes on Financial Transactions

10. A debit tax was introduced to compensate for the loss of stamp duty revenue. The government abolished stamp duty-widely regarded as a nuisance tax-on April 30, 2002. A residual turnover tax on banking and finance was abolished by the previous government toward the end of 2001. To compensate for these changes, a debit tax was introduced on May 1, 2002, at a rate of 0.1 percent on debits including checks, credit cards, travelers’ checks, and bank debit transactions on accounts maintained with banks and other financial institutions. The authorities regard this as a transitional measure, designed to compensate for the loss of stamp duty and turnover tax on financial transactions.

E. Trade Taxes

11. A number of trade tax reforms were implemented. The budget announced the immediate halving of the import surcharge, from 40 percent to 20 percent, with a commitment to eliminate it entirely at the beginning of 2003. Partly to compensate for the loss of stamp duty on imports, a “Port and Airport Development Levy” was introduced at a general 1 percent rate, and a concessionary 0.75 percent rate for exporters. Part of the rationale for this levy was the need to bring BOI imports into the tax net. The budget also replaced a number of ad valorem duties and import licenses on certain agricultural imports- mainly rice, chilies, onions, potatoes and edible oil-with specific duties equivalent to a 60 percent tariff. The customs duty on maize and textile fabrics was eliminated. To facilitate trade policy reform, a permanent Tariff Commission was established. Duty reductions consistent with the Indo-Sri Lanka free trade agreement were also implemented.

F. Excise Taxes

12. Some rationalization of excise taxes took place. The collection of excises on beer and liquor was rationalized by unifying the excise rate and assigning responsibility to a single department. Prior to this, these goods were taxed separately by the Excise Department, and by the Excise (Special Provisions) unit of the Customs Department. The budget announced the elimination of the Excise (Special Provisions) 10 percent duty on beer, and 30 percent on liquor, while adjusting the excise duty on domestic liquor and the customs duty on imported liquor to ensure revenue-neutrality. The excise duty on wine was increased, as was the customs duty. A new excise was imposed on aerated water. To facilitate the automatic petroleum pricing formula, the excises on gasoline and diesel were transformed from ad valorem to specific duties before the budget, on February 1, 2002.

G. Other Tax Policy Changes

Annual levies of Rs 12 million and Rs ½ million, to be paid quarterly, were imposed on casinos and off-course betting, respectively.
With respect to importation of used vehicles, the depreciation was reduced by 2½ percent for cars more than 2½ years old, and other vehicles more than 4 years old.
All duties, surcharges, and levies on imports with a value of less than Rs 10,000 sent through parcel post were removed.
A tax amnesty was announced.
The Rs 20,000 resident visa tax was abolished.
Rent on government property was increased and all administrative fees and charges were raised by 15 percent.
A flat fee of Rs 25 per piece will be charged on garments sold in the local market.
The 100 percent transfer tax on the purchase of immovable property by nonresidents was abolished.

H. Tax Administration

13. The need to simplify tax administration underpins the government’s tax reform strategy. Some measures to improve tax administration directly were also announced. All of the administrative functions of the Large Taxpayers Unit (LTU) were placed under a single commissioner with responsibility for administering all taxes owed by large taxpayers. The Inland Revenue Department registered an additional 30,000 taxpayers over the past year. Moreover, efforts are underway to strengthen the LTU audit program and intensify the collection of tax arrears; all of this was recommended by the November 2001 FAD technical assistance report. On the customs front, the authorities intend to shift toward a system of pre-clearance based on risk analysis.

14. The linchpin of the government’s tax administration strategy is the creation of a single revenue authority, comprising the Inland Revenue department, the Customs department, the Excise department and the tax administration component of the BOI. A seven member Revenue Management Advisory Committee was established on May 21, with a mandate to advise on the steps needed to set up a revenue authority. The government intends to pass enabling legislation in August, so its initiation can be announced with the 2003 budget (scheduled for November 6, 2002). It has also advertised for a CEO, outside the civil service pay scales. An FAD mission visited Colombo in August 2002 to provide technical assistance on this issue. The AsDB has also pledged to provide $500,000, mainly in the form of consultants; it will work closely with FAD.

15. Following the creation of the revenue authority, the BOI can be turned into a pure investment promotion agency, without tax or customs functions. The main reason for the continued existence of the BOI, especially after its incentives granting powers are being curtailed, is the perceived inefficiency by investors of customs administration. The government views amalgamation of all tax administration entities-including the BOI-into a single unified revenue authority as a politically acceptable way out of this impasse.

ANNEX V.1 Tax Summary

ANNEX V.2

Tax Incentives Under Inland Revenue Act

Category	Incentives
Agriculture, cultivation of land, and animal husbandry Fishing	Profits sourced from export of nontraditional goods are subject to 15 percent concessionary tax rate until April 1, 2014 (for companies commencing activity after November 10, 1993) and until April 1, 2015 (for companies commencing business before November 10, 1993).
Agriculture, tourism, and construction Exports	Dividends out of qualified export profits are subject to 15 percent tax rate. Companies that supply to export operations also benefit from 15 percent tax rate. Dividends are also taxed at 15 percent. 10-year tax holiday for the export and fruit and vegetables.
Housing	Tax Exemptions: Net annual value of any one place of residence owned and occupied is exempt from income tax; Rent is exempt from income tax for 7 year period including the year when construction is completed; 75 percent of profits from construction and sale of houses is exempt from income tax, and dividends out of such profits are exempt.
	Relief for Investment The following expenses are deductible from income as ‘qualifying payments’: Expenditure incurred after April 1, 2002 in the construction or purchase of the first house; Repayment of the capital of any approved housing loan for the construction or purchase of the first house after April 1, 2002.
Export of handicraft	Tax holiday (3 years)
Infrastructure facilities	Tax holiday (up to 20 years) if business commenced
Gems and jewelry trade	Profits and income from the sale of gold, gems, and jewelry are exempt from tax Dividends out of such profits are also exempt.

Tax Incentives Under Inland Revenue Act

Category	Incentives
Agriculture, cultivation of land, and animal husbandry Fishing	Profits sourced from export of nontraditional goods are subject to 15 percent concessionary tax rate until April 1, 2014 (for companies commencing activity after November 10, 1993) and until April 1, 2015 (for companies commencing business before November 10, 1993).
Agriculture, tourism, and construction Exports	Dividends out of qualified export profits are subject to 15 percent tax rate. Companies that supply to export operations also benefit from 15 percent tax rate. Dividends are also taxed at 15 percent. 10-year tax holiday for the export and fruit and vegetables.
Housing	Tax Exemptions: Net annual value of any one place of residence owned and occupied is exempt from income tax; Rent is exempt from income tax for 7 year period including the year when construction is completed; 75 percent of profits from construction and sale of houses is exempt from income tax, and dividends out of such profits are exempt.
	Relief for Investment The following expenses are deductible from income as ‘qualifying payments’: Expenditure incurred after April 1, 2002 in the construction or purchase of the first house; Repayment of the capital of any approved housing loan for the construction or purchase of the first house after April 1, 2002.
Export of handicraft	Tax holiday (3 years)
Infrastructure facilities	Tax holiday (up to 20 years) if business commenced
Gems and jewelry trade	Profits and income from the sale of gold, gems, and jewelry are exempt from tax Dividends out of such profits are also exempt.

Overview of Tax Incentives Under Section 17 of BOI Law ^1/

^¹/These rationalized BOI incentives will be administered under the Inland Revenue Act.

Overview of Tax Incentives Under Section 17 of BOI Law ^1/

Category	Incentives
Group I:
1. Nontraditional exports: Manufacturing (minimum investment of Rs 50 million and exporting at least 80 percent of output). Export oriented services (exporting at least 70 percent of output). Regional operating headquarters (exporting at least 70 percent of output).	Three year tax holiday, a concessionary 10 percent rate for 2 years, followed by a 20 percent rate. Import duty exemption on capital goods and raw materials for manufacturing and export oriented services. Import duty exemption on capital goods for regional operating headquarters during project establishment period.
2. Agriculture and agro processing (including traditional export crops): Minimum investment of Rs 5 million.	Three year tax holiday, a concessionary 10 percent rate for 2 years, followed by a 20 percent rate. Import duty exemption on capital goods.
1. Information technology and IT enabled services and IT related training institutes: Minimum of 15 technically qualified persons for IT enabled services and 300 students in IT related training institutes.	Three year tax holiday, a concessionary 10 percent rate for 2 years, followed by a 20 percent rate. Import duty exemption on capital goods.
Group II:
Pioneering investments: Power generation, transmission, and distribution. Development of highways, seaports, airports, railways, water services, and other infrastructure projects.	Five year tax holiday (investment Rs 12.5-Rs 25 billion). Eight year tax holiday (investment Rs 25-Rs 50 billion). Ten year tax holiday (investment above Rs 50 billion). Concessionary tax at 15 percent upon expiration of tax holiday. Import duty exemption on capital goods during project implementation period.

^¹/These rationalized BOI incentives will be administered under the Inland Revenue Act.

Overview of Tax Incentives Under Section 17 of BOI Law ^1/

Category	Incentives
Group I:
1. Nontraditional exports: Manufacturing (minimum investment of Rs 50 million and exporting at least 80 percent of output). Export oriented services (exporting at least 70 percent of output). Regional operating headquarters (exporting at least 70 percent of output).	Three year tax holiday, a concessionary 10 percent rate for 2 years, followed by a 20 percent rate. Import duty exemption on capital goods and raw materials for manufacturing and export oriented services. Import duty exemption on capital goods for regional operating headquarters during project establishment period.
2. Agriculture and agro processing (including traditional export crops): Minimum investment of Rs 5 million.	Three year tax holiday, a concessionary 10 percent rate for 2 years, followed by a 20 percent rate. Import duty exemption on capital goods.
1. Information technology and IT enabled services and IT related training institutes: Minimum of 15 technically qualified persons for IT enabled services and 300 students in IT related training institutes.	Three year tax holiday, a concessionary 10 percent rate for 2 years, followed by a 20 percent rate. Import duty exemption on capital goods.
Group II:
Pioneering investments: Power generation, transmission, and distribution. Development of highways, seaports, airports, railways, water services, and other infrastructure projects.	Five year tax holiday (investment Rs 12.5-Rs 25 billion). Eight year tax holiday (investment Rs 25-Rs 50 billion). Ten year tax holiday (investment above Rs 50 billion). Concessionary tax at 15 percent upon expiration of tax holiday. Import duty exemption on capital goods during project implementation period.

^¹/These rationalized BOI incentives will be administered under the Inland Revenue Act.

Statistical Appendix

Table 1.

Sri Lanka: Gross Domestic Product and Expenditure Components, 1996–2001 ^1/

Sources: Data provided by the Sri Lankan authorities; and Fund staff estimates.

^¹/At market prices.

^²/Includes changes in stocks and investment by public corporations not financed through the government budget.

^³/Including statistical discrepancy.

^⁴/New series of GDP estimates, with 1996 as the base year. Estimates for 1995 and before have not been compiled on the new basis.

^⁵/Growth rates for 1995-96 are based on the accounts at 1982 constant prices. See SM/98/183 for details.

Table 1.

Sri Lanka: Gross Domestic Product and Expenditure Components, 1996–2001 ^1/

		1996	1997	1998	1999	2000	2001 Prov.
		(In billions of Sri Lanka rupees at current prices)
Consumption		650.4	736.0	823.3	890.2	1,038.4	1,185.5
	Private	569.4	643.8	723.5	790.4	906.2	1,043.9
	Public	81.0	92.2	99.7	99.9	132.2	141.5
Gross investment		183.5	216.9	255.7	301.7	352.6	308.4
	Private ^2/	160.2	187.0	221.8	266.5	311.5	266.4
	Public	23.3	29.9	34.0	35.2	41.1	42.0
Domestic demand		833.9	952.9	1,079.0	1,192.0	1,391.0	1,493.9
Exports of goods and nonfactor services		268.6	325.3	369.0	392.4	490.7	517.5
Aggregate demand		1,102.6	1,278.2	1,447.9	1,584.4	1,881.6	2,011.4
Imports of goods and nonfactor services		337.2	388.2	430.1	478.5	624.0	611.3
Expenditure on gross domestic product		765.4	890.0	1,017.8	1,105.9	1,257.6	1,400.1
Net factor income from abroad		-11.3	-9.4	-11.6	-17.8	-23.1	-25.0
Gross national income ^3/		754.1	880.6	1,006.3	1,088.0	1,234.5	1,375.1
Net current transfers from abroad		42.3	49.1	58.2	64.1	75.6	85.7
National disposable income		796.4	929.7	1,064.4	1,152.2	1,310.1	1,460.8
		(In percent of GDP)
Consumption		85.0	82.7	80.9	80.5	82.6	84.7
Gross fixed investment		24.0	24.4	25.1	27.3	28.0	22.0
	Private ^2/	20.9	21.0	21.8	24.1	24.8	19.0
	Public	3.0	3.4	3.3	3.2	3.3	3.0
		(In billions of Sri Lanka rupees at constant 1996 prices) ^4/
Consumption		650.4	696.8	745.6	785.2	824.8	828.0
Gross investment		186.3	192.9	222.3	236.6	260.2	215.5
Domestic demand		836.7	889.7	968.0	1,021.8	1,084.9	1,043.6
Exports of goods and nonfactor services		268.6	299.9	302.9	315.0	371.7	347.5
Aggregate demand		1,105.3	1,189.5	1,270.8	1,336.8	1,456.6	1,391.1
Imports of goods and nonfactor services		337.2	372.5	415.3	444.4	510.6	458.8
Resource gap		-68.6	-72.6	-112.4	-129.4	-138.9	-111.2
Expenditure on gross domestic product		768.1	817.1	855.6	892.4	946.0	932.3
Gross domestic product at factor cost		695.9	739.8	774.8	808.3	857.0	844.6
		(Annual percent change, constant prices) ^5/
Consumption		3.4	7.1	7.0	5.3	5.0	0.4
Gross investment		2.8	3.5	15.3	6.4	10.0	-17.1
Domestic demand		3.3	6.3	8.8	5.6	6.2	-3.8
Exports of goods and nonfactor services		3.2	11.6	1.0	4.0	18.0	-6.5
Aggregate demand		3.2	7.6	6.8	5.2	9.0	-4.5
Imports of goods and nonfactor services		2.1	10.5	11.5	7.0	14.9	-10.1
Gross domestic product		3.8	6.3	4.7	4.3	6.0	-1.4
Memorandum items:
	Population (midyear, in millions)	17.5	17.7	17.9	18.2	18.5	18.7
	Gross national income per capita, in rupees (thousand)	43.1	49.7	56.1	59.8	66.8	73.4
	Gross national income per capita, in SDRs	537	613	640	621	669	645

Sources: Data provided by the Sri Lankan authorities; and Fund staff estimates.

^¹/At market prices.

^²/Includes changes in stocks and investment by public corporations not financed through the government budget.

^³/Including statistical discrepancy.

^⁴/New series of GDP estimates, with 1996 as the base year. Estimates for 1995 and before have not been compiled on the new basis.

^⁵/Growth rates for 1995-96 are based on the accounts at 1982 constant prices. See SM/98/183 for details.

Table 1.

Sri Lanka: Gross Domestic Product and Expenditure Components, 1996–2001 ^1/

		1996	1997	1998	1999	2000	2001 Prov.
		(In billions of Sri Lanka rupees at current prices)
Consumption		650.4	736.0	823.3	890.2	1,038.4	1,185.5
	Private	569.4	643.8	723.5	790.4	906.2	1,043.9
	Public	81.0	92.2	99.7	99.9	132.2	141.5
Gross investment		183.5	216.9	255.7	301.7	352.6	308.4
	Private ^2/	160.2	187.0	221.8	266.5	311.5	266.4
	Public	23.3	29.9	34.0	35.2	41.1	42.0
Domestic demand		833.9	952.9	1,079.0	1,192.0	1,391.0	1,493.9
Exports of goods and nonfactor services		268.6	325.3	369.0	392.4	490.7	517.5
Aggregate demand		1,102.6	1,278.2	1,447.9	1,584.4	1,881.6	2,011.4
Imports of goods and nonfactor services		337.2	388.2	430.1	478.5	624.0	611.3
Expenditure on gross domestic product		765.4	890.0	1,017.8	1,105.9	1,257.6	1,400.1
Net factor income from abroad		-11.3	-9.4	-11.6	-17.8	-23.1	-25.0
Gross national income ^3/		754.1	880.6	1,006.3	1,088.0	1,234.5	1,375.1
Net current transfers from abroad		42.3	49.1	58.2	64.1	75.6	85.7
National disposable income		796.4	929.7	1,064.4	1,152.2	1,310.1	1,460.8
		(In percent of GDP)
Consumption		85.0	82.7	80.9	80.5	82.6	84.7
Gross fixed investment		24.0	24.4	25.1	27.3	28.0	22.0
	Private ^2/	20.9	21.0	21.8	24.1	24.8	19.0
	Public	3.0	3.4	3.3	3.2	3.3	3.0
		(In billions of Sri Lanka rupees at constant 1996 prices) ^4/
Consumption		650.4	696.8	745.6	785.2	824.8	828.0
Gross investment		186.3	192.9	222.3	236.6	260.2	215.5
Domestic demand		836.7	889.7	968.0	1,021.8	1,084.9	1,043.6
Exports of goods and nonfactor services		268.6	299.9	302.9	315.0	371.7	347.5
Aggregate demand		1,105.3	1,189.5	1,270.8	1,336.8	1,456.6	1,391.1
Imports of goods and nonfactor services		337.2	372.5	415.3	444.4	510.6	458.8
Resource gap		-68.6	-72.6	-112.4	-129.4	-138.9	-111.2
Expenditure on gross domestic product		768.1	817.1	855.6	892.4	946.0	932.3
Gross domestic product at factor cost		695.9	739.8	774.8	808.3	857.0	844.6
		(Annual percent change, constant prices) ^5/
Consumption		3.4	7.1	7.0	5.3	5.0	0.4
Gross investment		2.8	3.5	15.3	6.4	10.0	-17.1
Domestic demand		3.3	6.3	8.8	5.6	6.2	-3.8
Exports of goods and nonfactor services		3.2	11.6	1.0	4.0	18.0	-6.5
Aggregate demand		3.2	7.6	6.8	5.2	9.0	-4.5
Imports of goods and nonfactor services		2.1	10.5	11.5	7.0	14.9	-10.1
Gross domestic product		3.8	6.3	4.7	4.3	6.0	-1.4
Memorandum items:
	Population (midyear, in millions)	17.5	17.7	17.9	18.2	18.5	18.7
	Gross national income per capita, in rupees (thousand)	43.1	49.7	56.1	59.8	66.8	73.4
	Gross national income per capita, in SDRs	537	613	640	621	669	645

Sources: Data provided by the Sri Lankan authorities; and Fund staff estimates.

^¹/At market prices.

^²/Includes changes in stocks and investment by public corporations not financed through the government budget.

^³/Including statistical discrepancy.

^⁴/New series of GDP estimates, with 1996 as the base year. Estimates for 1995 and before have not been compiled on the new basis.

^⁵/Growth rates for 1995-96 are based on the accounts at 1982 constant prices. See SM/98/183 for details.

Table 2.

Sri Lanka: Saving, Investment, and Current Account, 1996-2001

Sources: Data provided by the Sri Lankan authorities.

^¹/Total revenue minus current expenditure.

^²/Includes investment by public corporations not financed through the government budget.

^³/Includes net factor income and transfers from abroad.

Table 2.

Sri Lanka: Saving, Investment, and Current Account, 1996-2001

		1996	1997	1998	1999	2000	2001 Prov.
		(In billions of Sri Lanka rupees at current prices)
Gross investment		186.3	217.1	255.9	301.8	352.6	308.5
External current account balance		-40.2	-25.8	-17.9	-41.2	-82.6	-35.0
National saving		145.7	191.3	238.0	260.3	270.0	273.5
Net factor income from abroad		-11.3	-9.4	-11.6	-17.8	-23.1	-25.0
Net private transfers		39.2	46.5	54.8	62.4	73.8	83.8
Domestic saving		117.7	154.2	194.7	215.7	219.3	214.7
	Private	146.6	174.0	219.4	227.1	262.3	283.7
	Public	-28.9	-19.7	-24.6	-11.4	-43.0	-69.0
		(In percent of GDP)
Domestic saving		15.4	17.3	19.1	19.5	17.4	15.3
	Private	19.1	19.5	21.6	20.5	20.9	20.3
	Public ^1/	-3.8	-2.2	-2.4	-1.0	-3.4	-4.9
Gross investment		24.0	24.4	25.1	27.3	28.0	22.0
	Private ^2/	20.9	21.0	21.8	24.1	24.8	19.0
	Public	3.0	3.4	3.3	3.2	3.3	3.0
National saving		19.0	21.5	23.4	23.5	21.5	19.5
	Of which: Private ^3/	22.8	23.7	25.8	24.6	24.9	24.5
External current account balance		-5.2	-2.9	-1.8	-3.7	-6.6	-2.5
Private sector saving minus investment		1.9	2.7	4.0	0.5	0.1	5.4
Public sector saving minus investment		-6.8	-5.6	-5.8	-4.2	-6.7	-7.9

Sources: Data provided by the Sri Lankan authorities.

^¹/Total revenue minus current expenditure.

^²/Includes investment by public corporations not financed through the government budget.

^³/Includes net factor income and transfers from abroad.

Table 2.

Sri Lanka: Saving, Investment, and Current Account, 1996-2001

		1996	1997	1998	1999	2000	2001 Prov.
		(In billions of Sri Lanka rupees at current prices)
Gross investment		186.3	217.1	255.9	301.8	352.6	308.5
External current account balance		-40.2	-25.8	-17.9	-41.2	-82.6	-35.0
National saving		145.7	191.3	238.0	260.3	270.0	273.5
Net factor income from abroad		-11.3	-9.4	-11.6	-17.8	-23.1	-25.0
Net private transfers		39.2	46.5	54.8	62.4	73.8	83.8
Domestic saving		117.7	154.2	194.7	215.7	219.3	214.7
	Private	146.6	174.0	219.4	227.1	262.3	283.7
	Public	-28.9	-19.7	-24.6	-11.4	-43.0	-69.0
		(In percent of GDP)
Domestic saving		15.4	17.3	19.1	19.5	17.4	15.3
	Private	19.1	19.5	21.6	20.5	20.9	20.3
	Public ^1/	-3.8	-2.2	-2.4	-1.0	-3.4	-4.9
Gross investment		24.0	24.4	25.1	27.3	28.0	22.0
	Private ^2/	20.9	21.0	21.8	24.1	24.8	19.0
	Public	3.0	3.4	3.3	3.2	3.3	3.0
National saving		19.0	21.5	23.4	23.5	21.5	19.5
	Of which: Private ^3/	22.8	23.7	25.8	24.6	24.9	24.5
External current account balance		-5.2	-2.9	-1.8	-3.7	-6.6	-2.5
Private sector saving minus investment		1.9	2.7	4.0	0.5	0.1	5.4
Public sector saving minus investment		-6.8	-5.6	-5.8	-4.2	-6.7	-7.9

Sources: Data provided by the Sri Lankan authorities.

^¹/Total revenue minus current expenditure.

^²/Includes investment by public corporations not financed through the government budget.

^³/Includes net factor income and transfers from abroad.

Table 3.

Sri Lanka: Gross Domestic Product by Industrial Origin at Current Prices, 1996–2001

Sources: Data provided by the Sri Lankan authorities; and Fund staff estimates.

^¹/Including forestry and fishing.

^²/Tea, rubber, and coconuts.

^³/Based on factor costs.

Table 3.

Sri Lanka: Gross Domestic Product by Industrial Origin at Current Prices, 1996–2001

		1996	1997	1998	1999	2000	2001 Prov.
		(In billions of Sri Lanka rupees at current prices)
Agriculture ^1/		156.1	175.8	192.7	205.6	218.4	242.5
	Plantation crops ^2/	27.2	30.8	32.5	32.2	31.3	31.0
	Paddy	19.9	24.5	26.8	30.2	26.5	28.8
	Fishing	18.8	21.4	23.7	25.8	29.4	31.5
	Other	90.3	99.1	109.7	117.3	131.2	151.2
Mining and quarrying		13.9	16.6	17.4	18.3	21.5	23.9
Manufacturing		112.7	131.9	151.0	163.1	189.3	198.1
	Plantation crop processing	16.2	19.5	23.2	24.8	28.2	27.9
	Other	96.5	112.4	127.8	138.3	161.1	170.2
Construction		48.2	56.4	69.3	75.5	82.7	94.5
Services		364.9	423.0	482.4	532.2	613.3	693.8
Gross domestic product		695.9	803.7	912.8	994.7	1,125.3	1,252.8
Net factor income from abroad		-11.3	-9.4	-11.6	-17.8	-23.1	-25.0
Gross national product		684.7	794.3	901.3	976.9	1,102.2	1,227.8
		(In percent of GDP)
Agriculture ^1/		22.4	21.9	21.1	20.7	19.4	19.4
	Plantation crops ^2/	3.9	3.8	3.6	3.2	2.8	2.5
	Paddy	2.9	3.0	2.9	3.0	2.4	2.3
	Fishing	2.7	2.7	2.6	2.6	2.6	2.5
	Other	13.0	12.3	12.0	11.8	11.7	12.1
Mining and quarrying		2.0	2.1	1.9	1.8	1.9	1.9
Manufacturing		16.2	16.4	16.5	16.4	16.8	15.8
	Plantation crop processing	2.3	2.4	2.5	2.5	2.5	2.2
	Other	13.9	14.0	14.0	13.9	14.3	13.6
Construction		6.9	7.0	7.6	7.6	7.3	7.5
Services		52.4	52.6	52.8	53.5	54.5	55.4
Gross domestic product		100.0	100.0	100.0	100.0	100.0	100.0
Memorandum items:
	Annual percentage increase in implicit GDP deflator ^3/	12.1	8.6	8.4	4.4	6.7	13.0
	CPI Inflation	15.9	9.6	9.4	4.7	6.2	14.2

Sources: Data provided by the Sri Lankan authorities; and Fund staff estimates.

^¹/Including forestry and fishing.

^²/Tea, rubber, and coconuts.

^³/Based on factor costs.

Table 3.

Sri Lanka: Gross Domestic Product by Industrial Origin at Current Prices, 1996–2001

		1996	1997	1998	1999	2000	2001 Prov.
		(In billions of Sri Lanka rupees at current prices)
Agriculture ^1/		156.1	175.8	192.7	205.6	218.4	242.5
	Plantation crops ^2/	27.2	30.8	32.5	32.2	31.3	31.0
	Paddy	19.9	24.5	26.8	30.2	26.5	28.8
	Fishing	18.8	21.4	23.7	25.8	29.4	31.5
	Other	90.3	99.1	109.7	117.3	131.2	151.2
Mining and quarrying		13.9	16.6	17.4	18.3	21.5	23.9
Manufacturing		112.7	131.9	151.0	163.1	189.3	198.1
	Plantation crop processing	16.2	19.5	23.2	24.8	28.2	27.9
	Other	96.5	112.4	127.8	138.3	161.1	170.2
Construction		48.2	56.4	69.3	75.5	82.7	94.5
Services		364.9	423.0	482.4	532.2	613.3	693.8
Gross domestic product		695.9	803.7	912.8	994.7	1,125.3	1,252.8
Net factor income from abroad		-11.3	-9.4	-11.6	-17.8	-23.1	-25.0
Gross national product		684.7	794.3	901.3	976.9	1,102.2	1,227.8
		(In percent of GDP)
Agriculture ^1/		22.4	21.9	21.1	20.7	19.4	19.4
	Plantation crops ^2/	3.9	3.8	3.6	3.2	2.8	2.5
	Paddy	2.9	3.0	2.9	3.0	2.4	2.3
	Fishing	2.7	2.7	2.6	2.6	2.6	2.5
	Other	13.0	12.3	12.0	11.8	11.7	12.1
Mining and quarrying		2.0	2.1	1.9	1.8	1.9	1.9
Manufacturing		16.2	16.4	16.5	16.4	16.8	15.8
	Plantation crop processing	2.3	2.4	2.5	2.5	2.5	2.2
	Other	13.9	14.0	14.0	13.9	14.3	13.6
Construction		6.9	7.0	7.6	7.6	7.3	7.5
Services		52.4	52.6	52.8	53.5	54.5	55.4
Gross domestic product		100.0	100.0	100.0	100.0	100.0	100.0
Memorandum items:
	Annual percentage increase in implicit GDP deflator ^3/	12.1	8.6	8.4	4.4	6.7	13.0
	CPI Inflation	15.9	9.6	9.4	4.7	6.2	14.2

Sources: Data provided by the Sri Lankan authorities; and Fund staff estimates.

^¹/Including forestry and fishing.

^²/Tea, rubber, and coconuts.

^³/Based on factor costs.

Table 4.

Sri Lanka: Gross Domestic Product by Industrial Origin at Constant Prices, 1996–2001 ^1/

^¹/New series of GDP estimates, with 1996 as the base year. Estimates for 1995 and before have not been compiled on the new basis. Growth rates for 1995-96 are based on the accounts at 1982 constant prices. See SM/98/183 for details.

^²/Including forestry and fishing.

^³/Tea, rubber, and coconuts.

Table 4.

Sri Lanka: Gross Domestic Product by Industrial Origin at Constant Prices, 1996–2001 ^1/

			1996	1997	1998	1999	2000	2001 Prov.
			(In billions of Sri Lanka rupees at 1996 prices)
Agriculture ^2/			156.1	160.8	164.8	172.2	175.3	170.1
	Plantation crops ^3/		27.2	28.1	27.5	28.8	30.5	28.5
	Paddy		19.9	22.1	26.2	27.9	27.8	26.2
	Fishing		18.8	19.7	21.3	23.0	23.5	22.6
	Other		90.3	90.8	89.8	92.6	93.5	92.7
Mining and quarrying			13.9	14.5	13.7	14.2	14.9	15.0
Manufacturing			112.7	122.9	130.7	136.5	149.1	143.2
	Plantation crop processing		16.2	16.8	16.6	17.2	17.9	17.0
	Other		96.5	106.2	114.1	119.3	131.2	126.2
Construction			48.2	50.8	54.5	57.1	59.8	61.3
Services			364.9	390.8	411.2	428.3	457.9	455.1
	Of which:
		Public administration and defense	35.2	37.1	38.2	39.8	41.4	41.9
		Wholesale and retail trade	155.3	165.1	172.5	174.2	189.4	177.1
Gross domestic product			695.9	739.8	774.8	808.3	857.0	844.6
Net factor income from abroad			-11.3	-8.8	-9.9	-14.0	-16.8	-15.5
Gross national product			684.7	730.9	764.9	794.3	840.2	829.1
			(Annual percentage change)
Agriculture ^2/			-4.6	3.0	2.5	4.5	1.8	-3.0
	Plantation crops ^3/		-0.9	3.5	-2.3	4.9	5.8	-6.4
	Paddy		-26.7	11.2	18.3	6.6	-0.3	-5.7
	Fishing		-3.9	5.0	8.3	7.6	2.5	-4.0
	Other		3.2	0.6	-1.1	3.0	1.0	-0.8
Mining and quarrying			8.9	3.8	-5.4	4.1	4.8	0.7
Manufacturing			6.5	9.1	6.3	4.4	9.2	-4.0
	Plantation crop processing		1.0	3.5	-1.2	3.8	4.2	-5.3
	Other		7.2	10.0	7.5	4.5	10.0	-3.8
Construction			3.4	5.4	7.1	4.8	4.8	2.5
Services			5.8	7.1	5.2	4.2	6.9	-0.6
	Of which:
		Public administration and defense	…	5.2	3.0	4.2	4.2	1.0
		Wholesale and retail trade	5.2	6.3	4.5	1.0	8.7	-6.5
Gross domestic product			3.8	6.3	4.7	4.3	6.0	-1.4

^²/Including forestry and fishing.

^³/Tea, rubber, and coconuts.

Table 4.

Sri Lanka: Gross Domestic Product by Industrial Origin at Constant Prices, 1996–2001 ^1/

			1996	1997	1998	1999	2000	2001 Prov.
			(In billions of Sri Lanka rupees at 1996 prices)
Agriculture ^2/			156.1	160.8	164.8	172.2	175.3	170.1
	Plantation crops ^3/		27.2	28.1	27.5	28.8	30.5	28.5
	Paddy		19.9	22.1	26.2	27.9	27.8	26.2
	Fishing		18.8	19.7	21.3	23.0	23.5	22.6
	Other		90.3	90.8	89.8	92.6	93.5	92.7
Mining and quarrying			13.9	14.5	13.7	14.2	14.9	15.0
Manufacturing			112.7	122.9	130.7	136.5	149.1	143.2
	Plantation crop processing		16.2	16.8	16.6	17.2	17.9	17.0
	Other		96.5	106.2	114.1	119.3	131.2	126.2
Construction			48.2	50.8	54.5	57.1	59.8	61.3
Services			364.9	390.8	411.2	428.3	457.9	455.1
	Of which:
		Public administration and defense	35.2	37.1	38.2	39.8	41.4	41.9
		Wholesale and retail trade	155.3	165.1	172.5	174.2	189.4	177.1
Gross domestic product			695.9	739.8	774.8	808.3	857.0	844.6
Net factor income from abroad			-11.3	-8.8	-9.9	-14.0	-16.8	-15.5
Gross national product			684.7	730.9	764.9	794.3	840.2	829.1
			(Annual percentage change)
Agriculture ^2/			-4.6	3.0	2.5	4.5	1.8	-3.0
	Plantation crops ^3/		-0.9	3.5	-2.3	4.9	5.8	-6.4
	Paddy		-26.7	11.2	18.3	6.6	-0.3	-5.7
	Fishing		-3.9	5.0	8.3	7.6	2.5	-4.0
	Other		3.2	0.6	-1.1	3.0	1.0	-0.8
Mining and quarrying			8.9	3.8	-5.4	4.1	4.8	0.7
Manufacturing			6.5	9.1	6.3	4.4	9.2	-4.0
	Plantation crop processing		1.0	3.5	-1.2	3.8	4.2	-5.3
	Other		7.2	10.0	7.5	4.5	10.0	-3.8
Construction			3.4	5.4	7.1	4.8	4.8	2.5
Services			5.8	7.1	5.2	4.2	6.9	-0.6
	Of which:
		Public administration and defense	…	5.2	3.0	4.2	4.2	1.0
		Wholesale and retail trade	5.2	6.3	4.5	1.0	8.7	-6.5
Gross domestic product			3.8	6.3	4.7	4.3	6.0	-1.4

^²/Including forestry and fishing.

^³/Tea, rubber, and coconuts.

Table 5.

Sri Lanka: Trends in Principal Agricultural Crops, 1992-2001

Sources: Sri Lanka Tea Board, Rubber Development Department, Coconut Development Authority, Department of Census and Statistics, Ministry of Agriculture, Paddy Marketing Board, National Fertiliser Secretarial, Plantation Companies, Central Bank of Sri Lanka.

^¹/Up to 1992, registered extent. Tea Commissioner’s Division (TCD) terminated the registration of new extents under tea from 1 January 1993. Data for 1993, are based on the Department of Census and Statistics Survey on Agricultural Crops and Livestock, 1993. Since 1994, data is based on a Tea and Land Survey conducted in 1994/1995 by the T.C.D (Excluding extents in abandoned tea lands). Extents in 1999 onwards, are revised based on the 1999 estate sector survey.

^²/Since 1992, the weighted average cost of production of public sector estates and private plantation companies. Includes green leaf suppliers profit margin.

^³/Three major coconut kernel products only.

^⁴/On a cultivation year basis.

^⁵/20.9 kg. of paddy =1 bushel of paddy.

^⁶/Includes paddy purchased by the PMB above the guaranteed price in 1996.

Table 5.

Sri Lanka: Trends in Principal Agricultural Crops, 1992-2001

Category			Unit	1992	1993	1994	1995	1996	1997	1996	1999	2000	2001 Prov.
Tea
	Production		kg mn	178.9	231.9	242.2	245.9	258.4	276.9	280.1	283.7	305.8	295.1
	Registered extent under tea ^1/		hectares	221,836	192,730	187,426	188,970	189,354	193,676	194,736	179,761	180,025	180,170
	Fertiliser used		mt ‘000	110.2	147.2	126.4	120.3	153.9	161.8	181.7	164.1	200.2	186.9
	Cost of Production^2/		Rs/kg	72.26	75.81	75.67	76.74	87.04	90.26	100.71	101.29	110.64	121.43
	Average price
		Colombo (net)	Rs/kg	60.51	68.88	65.12	72.21	103.88	119.40	134.35	115.31	135.53	143.96
		Export (f.o.b.)	Rs/kg	81.98	91.16	91.32	102.31	139.56	158.39	184.94	162.39	184.73	208.89
	Replanted annual		hectares	1,417	1,311	1,225	1,215	937	926	1,234	1,376	1,094	1,018
	Replanted cumulative		hectares	56,122	57,433	58,658	59,873	60,810	61,736	62,970	64,346	65,440	66,458
Rubber
	Production		kg mn	106.1	104.2	105.3	105.7	112.5	105.8	95.7	96.6	87.6	86.0
	Total extent under rubber		hectares ‘000	194,550	161,477	160,909	161,600	162,000	158,200	158,140	159,097	157,031	157,100
	Area under tapping		hectares	147,265	119,353	120,883	123,948	122,252	123,493	124,608	127,707	128,300	131,970
	Fertiliser used		mt ‘000	13.1	17.9	17.2	14.9	16.6	12.3	15.6	9.9	13.8	8.8
	Yield		kg/hectare	725	873	870	853	927	868	768	755	683	653
	Cost of Production		Rs/kg	24.50	30.22	30.85	33.37	36.70	40.37	42.00	43.50	44.50	48.00
	Average price
		Colombo (RSS 1)	Rs/kg	29.28	35.48	50.36	72.04	67.85	56.71	49.76	45.33	54.78	54.70
		Export (f.o.b.)	Rs/kg	37.65	44.34	51.81	83.69	79.78	75.42	67.72	53.90	66.95	66.35
	Replanted annual		hectares	3,918	2,419	1,623	3,239	3,443	1,261	1,288	643	793	445
Coconut
	Production		nuts mn	2,296	2,164	2,622	2,755	2,561	2,631	2,552	2,828	3,096	2,796
	Fertiliser used		ml ‘000	34.3	35.1	31.2	33.6	39.1	33.8	36.1	39.1	33.9	30.1
	Cost of production		Rs/nut	1.97	2.03	1.84	2.02	2.18	2.26	2.40	2.75	3.27	3.50
	Average export price (f.o.b) ^3/		Rs/nut	6.47	6.31	5.67	6.08	9.42	9.63	8.31	9.95	7.35	7.05
Paddy
	Production ^4/		mt ‘000	2,340	2,570	2,684	2,810	2,061	2,239	2,692	2,857	2,860	2,694
	Area sown ^4/		hectares ‘000	835	930	915	749	730	848	896	878	798
		Harvested ^4/	hectares ‘000	766	820	897	890	660	690	829	874	832	765
		Under improved varieties ^4/	hectares ‘000	627	n.a.	n.a.	888	734	662	790	872	862	n.a.
	Fertiliser used ^4/		ml ‘000	208	248	270	257	238	245	352	321	262	279
	Yield ^4/		kg/hectare	3,428	3,511	3,363	3,535	3,513	3,619	3,634	3,672	3,856	3,954
	Guaranteed price ^5/		Rs/bushel	136	155	155	155	155	155	155	155	155	155
	Purchases under Guaranteed Price Scheme ^6/		mt ‘000	7	46	120	282	1	…	…	…	…	…

^²/Since 1992, the weighted average cost of production of public sector estates and private plantation companies. Includes green leaf suppliers profit margin.

^³/Three major coconut kernel products only.

^⁴/On a cultivation year basis.

^⁵/20.9 kg. of paddy =1 bushel of paddy.

^⁶/Includes paddy purchased by the PMB above the guaranteed price in 1996.

Table 5.

Sri Lanka: Trends in Principal Agricultural Crops, 1992-2001

Category			Unit	1992	1993	1994	1995	1996	1997	1996	1999	2000	2001 Prov.
Tea
	Production		kg mn	178.9	231.9	242.2	245.9	258.4	276.9	280.1	283.7	305.8	295.1
	Registered extent under tea ^1/		hectares	221,836	192,730	187,426	188,970	189,354	193,676	194,736	179,761	180,025	180,170
	Fertiliser used		mt ‘000	110.2	147.2	126.4	120.3	153.9	161.8	181.7	164.1	200.2	186.9
	Cost of Production^2/		Rs/kg	72.26	75.81	75.67	76.74	87.04	90.26	100.71	101.29	110.64	121.43
	Average price
		Colombo (net)	Rs/kg	60.51	68.88	65.12	72.21	103.88	119.40	134.35	115.31	135.53	143.96
		Export (f.o.b.)	Rs/kg	81.98	91.16	91.32	102.31	139.56	158.39	184.94	162.39	184.73	208.89
	Replanted annual		hectares	1,417	1,311	1,225	1,215	937	926	1,234	1,376	1,094	1,018
	Replanted cumulative		hectares	56,122	57,433	58,658	59,873	60,810	61,736	62,970	64,346	65,440	66,458
Rubber
	Production		kg mn	106.1	104.2	105.3	105.7	112.5	105.8	95.7	96.6	87.6	86.0
	Total extent under rubber		hectares ‘000	194,550	161,477	160,909	161,600	162,000	158,200	158,140	159,097	157,031	157,100
	Area under tapping		hectares	147,265	119,353	120,883	123,948	122,252	123,493	124,608	127,707	128,300	131,970
	Fertiliser used		mt ‘000	13.1	17.9	17.2	14.9	16.6	12.3	15.6	9.9	13.8	8.8
	Yield		kg/hectare	725	873	870	853	927	868	768	755	683	653
	Cost of Production		Rs/kg	24.50	30.22	30.85	33.37	36.70	40.37	42.00	43.50	44.50	48.00
	Average price
		Colombo (RSS 1)	Rs/kg	29.28	35.48	50.36	72.04	67.85	56.71	49.76	45.33	54.78	54.70
		Export (f.o.b.)	Rs/kg	37.65	44.34	51.81	83.69	79.78	75.42	67.72	53.90	66.95	66.35
	Replanted annual		hectares	3,918	2,419	1,623	3,239	3,443	1,261	1,288	643	793	445
Coconut
	Production		nuts mn	2,296	2,164	2,622	2,755	2,561	2,631	2,552	2,828	3,096	2,796
	Fertiliser used		ml ‘000	34.3	35.1	31.2	33.6	39.1	33.8	36.1	39.1	33.9	30.1
	Cost of production		Rs/nut	1.97	2.03	1.84	2.02	2.18	2.26	2.40	2.75	3.27	3.50
	Average export price (f.o.b) ^3/		Rs/nut	6.47	6.31	5.67	6.08	9.42	9.63	8.31	9.95	7.35	7.05
Paddy
	Production ^4/		mt ‘000	2,340	2,570	2,684	2,810	2,061	2,239	2,692	2,857	2,860	2,694
	Area sown ^4/		hectares ‘000	835	930	915	749	730	848	896	878	798
		Harvested ^4/	hectares ‘000	766	820	897	890	660	690	829	874	832	765
		Under improved varieties ^4/	hectares ‘000	627	n.a.	n.a.	888	734	662	790	872	862	n.a.
	Fertiliser used ^4/		ml ‘000	208	248	270	257	238	245	352	321	262	279
	Yield ^4/		kg/hectare	3,428	3,511	3,363	3,535	3,513	3,619	3,634	3,672	3,856	3,954
	Guaranteed price ^5/		Rs/bushel	136	155	155	155	155	155	155	155	155	155
	Purchases under Guaranteed Price Scheme ^6/		mt ‘000	7	46	120	282	1	…	…	…	…	…

^²/Since 1992, the weighted average cost of production of public sector estates and private plantation companies. Includes green leaf suppliers profit margin.

^³/Three major coconut kernel products only.

^⁴/On a cultivation year basis.

^⁵/20.9 kg. of paddy =1 bushel of paddy.

^⁶/Includes paddy purchased by the PMB above the guaranteed price in 1996.

Table 6.

Sri Lanka: Consumption and Prices of Petroleum and Electricity, 1996-2001

Source: Data provided by the Sri Lanka authorities; Ceylon Petroleum Corporation; and Ceylon Electricity Board.

^¹/Including use for electricity generation.

^²/End of period.

^³/Price includes taxes.

^⁴/Period average.

^⁵/Unit cost of production including customs duty (all customs duties are charged to domestic sales), turnover taxes, and ail other expenses,

^⁶/Basic rate on household consumption of electricity between 50 and 500 kilowatt hours per month, excluding fuel surcharge levied on all users of electricity exceeding 150 kwh per month, in SL Rs per Kwh.

Table 6.

Sri Lanka: Consumption and Prices of Petroleum and Electricity, 1996-2001

		1996	1997	1998	1999	2000	2001 Prov.
Gross consumption of selected Petroleum products (’000 MT)
	Kerosene	228	225	236	243	229	228
	Gasoline	197	193	204	213	224	250
	Auto diesel	1,048	1,295	1,224	1,377	1,728	1,625
	Furnace oil	336	372	706	676	737	749
Consumption of electricity ^1/		3,588	4,039	4,521	4,809	5,259	5,238
		(In percent)
Composition of electricity generation
	Hydro power (CEB)	71.7	66.9	68.8	67.1	46.1	46.0
	Thermal power (CEB)	21.5	20.4	21.9	22.6	32.2	28.6
	Private power	3.4	7.8	0.4	8.4	19.3	23.7
	Self generation	3.4	4.6	2.0	1.7	2.3	1.5
		(In Sri Lanka rupees per liter)
Prices of petroleum products ^2/^3/
	Kerosene	10.4	10.4	10.4	10.4	18.4	17.4
	Gasoline	50.0	50.0	50.0	50.0	50.0	50.0
	Auto diesel	13.2	13.2	13.2	13.2	24.5	26.5
	Fuel oil	7.2	7.2	7.2	7.2	14.6	16.5
Cost price of petroleum products ^4/^5/
	Kerosene	12.5	13.0	9.8	15.0	23.7	20.2
	Gasoline	32.2	30.3	28.4	33.8	35.8	29.4
	Auto diesel	14.0	14.5	11.5	14.7	25.3	24.8
	Fuel oil	7.5	8.8	6.6	10.8	17.3	15.2
	Crude oil (c.i.f., in US$ per barrel)	20.2	19.4	13.5	19.1	28.5	24.5
Price of electricity ^2/^6/		4.0	4.2	4.5	4.5	4.7	4.7
Price of electricity for domestic units >150 Kwh ^2/^6/		3.5	3.6	5.0	5.0	5.5	5.5

Source: Data provided by the Sri Lanka authorities; Ceylon Petroleum Corporation; and Ceylon Electricity Board.

^¹/Including use for electricity generation.

^²/End of period.

^³/Price includes taxes.

^⁴/Period average.

^⁵/Unit cost of production including customs duty (all customs duties are charged to domestic sales), turnover taxes, and ail other expenses,

Table 6.

Sri Lanka: Consumption and Prices of Petroleum and Electricity, 1996-2001

		1996	1997	1998	1999	2000	2001 Prov.
Gross consumption of selected Petroleum products (’000 MT)
	Kerosene	228	225	236	243	229	228
	Gasoline	197	193	204	213	224	250
	Auto diesel	1,048	1,295	1,224	1,377	1,728	1,625
	Furnace oil	336	372	706	676	737	749
Consumption of electricity ^1/		3,588	4,039	4,521	4,809	5,259	5,238
		(In percent)
Composition of electricity generation
	Hydro power (CEB)	71.7	66.9	68.8	67.1	46.1	46.0
	Thermal power (CEB)	21.5	20.4	21.9	22.6	32.2	28.6
	Private power	3.4	7.8	0.4	8.4	19.3	23.7
	Self generation	3.4	4.6	2.0	1.7	2.3	1.5
		(In Sri Lanka rupees per liter)
Prices of petroleum products ^2/^3/
	Kerosene	10.4	10.4	10.4	10.4	18.4	17.4
	Gasoline	50.0	50.0	50.0	50.0	50.0	50.0
	Auto diesel	13.2	13.2	13.2	13.2	24.5	26.5
	Fuel oil	7.2	7.2	7.2	7.2	14.6	16.5
Cost price of petroleum products ^4/^5/
	Kerosene	12.5	13.0	9.8	15.0	23.7	20.2
	Gasoline	32.2	30.3	28.4	33.8	35.8	29.4
	Auto diesel	14.0	14.5	11.5	14.7	25.3	24.8
	Fuel oil	7.5	8.8	6.6	10.8	17.3	15.2
	Crude oil (c.i.f., in US$ per barrel)	20.2	19.4	13.5	19.1	28.5	24.5
Price of electricity ^2/^6/		4.0	4.2	4.5	4.5	4.7	4.7
Price of electricity for domestic units >150 Kwh ^2/^6/		3.5	3.6	5.0	5.0	5.5	5.5

Source: Data provided by the Sri Lanka authorities; Ceylon Petroleum Corporation; and Ceylon Electricity Board.

^¹/Including use for electricity generation.

^²/End of period.

^³/Price includes taxes.

^⁴/Period average.

^⁵/Unit cost of production including customs duty (all customs duties are charged to domestic sales), turnover taxes, and ail other expenses,

Table 7.

Sri Lanka: Price Indicators, 1996-2002

Source: Data provided by the Sri Lanka authorities.

^¹/Based on market prices.

^²/Low-income housing is under rent control.

^³/2002 data are for January-May.

Table 7.

Sri Lanka: Price Indicators, 1996-2002

			Weights	1996	1997	1998	1999	2000	2001	2002 Jan-Jun.
GDP deflator ^1/			100.0	10.8	8.9	9.2	4.6	7.3	13.0	…
Colombo consumer price index			100.0	15.9	9.6	9.4	4.7	6.2	14.2	9.6
	Food		61.9	19.2	10.9	10.9	4.0	4.5	15.2	10.9
		Of which: Rice	6.4	25.8	7.7	-0.9	19.6	-4.5	5.1	…
		Of which: Bread, wheat flour	9.4	59.7	30.5	8.0	5.9	-7.6	9.0	…
	Clothing		9.4	2.2	2.7	1.0	1.3	1.1	4.2	5.1
	Fuel and light		4.3	8.1	4.5	3.2	1.5	18.6	14.3	4.4
		Of which: Kerosene	4.0	2.4	6.9	0.0	0.0	45.5	24.7	…
	Rent ^2/		5.7	0.0	0.0	0.0	0.0	0.0	0.0	0.0
	Miscellaneous		18.7	10.8	8.2	7.5	10.3	9.6	11.7	7.5
Colombo district consumer price index			100.0	…	7.4	7.3	3.6	3.6	10.3	8.1
	Food and Drinks		58.7	…	7.3	8.9	2.4	1.7	11.8	11.4
	Housing		13.3	…	4.4	3.3	4.3	2.6	0.9	0.3
	Fuel and Light		4.9	…	8.9	13.8	0.6	15.8	16.1	4.9
	Clothing and Foot Wear		6.2	…	10.1	2.4	1.9	1.6	5.2	3.2
	Liquor Tobacco and Betel and Arecanuts		4.4	…	14.1	7.6	22.0	12.4	10.1	0.1
	Personal Care and Health		3.8	…	14.4	5.8	4.1	4.1	9.8	6.9
	Transport		3.7	…	1.4	0.2	3.6	14.3	17.5	1.7
	Recreation and Education		2.8	…	4.6	1.2	1.9	2.2	14.4	11.5
	Miscellaneous		2.3	…	7.0	9.5	7.1	-0.9	8.0	17.5
Sri Lanka consumer price index ^3/			100.0	…	…	…	4.0	1.5	12.1	12.6
	Food, beverages, and tobacco		71.2	…	…	…	4.2	-0.7	12.1	13.2
	Clothing and footwear		4.0	…	…	…	3.5	1.1	3.7	8.5
	Housing, water, electricity, gas, & other fuels		13.1	…	…	…	1.6	9.1	11.5	8.6
	Furnishing, household equipment, & routine house maintenance		2.1	…	…	…	4.5	-13.6	15.4	19.9
	Health		2.4	…	…	…	5.9	18.2	12.4	24.9
	Transport		2.9	…	…	…	3.4	18.0	19.9	0.6
	Leisure, entertainment & culture		0.8	…	…	…	10.2	2.8	4.2	6.5
	Education		1.3	…	…	…	7.9	8.8	8.5	12.2
	Miscellaneous		2.1	…	…	…	5.3	3.3	19.2	19.1
Wholesale price index			100.0	20.5	6.9	6.1	-0.3	1.7	11.7	…
	Domestic goods		50.3	11.7	6.5	5.0	2.9	2.8	11.0	…
	Imports		27.2	11.6	8.2	0.1	-0.1	12.0	17.1	…
	Exports		22.5	40.4	6.7	10.9	-4.0	-5.3	9.2	…
Memorandum items
	Colombo consumer price index (end-period)		…	16.8	10.7	3.7	4.0	10.8	10.8	10.7
	Wholesale price index (end-period)			18.1	6.6	0.9	-0.5	4.8	14.7	…
	Sri Lanka consumer price index (end-period)			…	…	…	0.6	8.1	13.4	…

Source: Data provided by the Sri Lanka authorities.

^¹/Based on market prices.

^²/Low-income housing is under rent control.

^³/2002 data are for January-May.

Table 7.

Sri Lanka: Price Indicators, 1996-2002

			Weights	1996	1997	1998	1999	2000	2001	2002 Jan-Jun.
GDP deflator ^1/			100.0	10.8	8.9	9.2	4.6	7.3	13.0	…
Colombo consumer price index			100.0	15.9	9.6	9.4	4.7	6.2	14.2	9.6
	Food		61.9	19.2	10.9	10.9	4.0	4.5	15.2	10.9
		Of which: Rice	6.4	25.8	7.7	-0.9	19.6	-4.5	5.1	…
		Of which: Bread, wheat flour	9.4	59.7	30.5	8.0	5.9	-7.6	9.0	…
	Clothing		9.4	2.2	2.7	1.0	1.3	1.1	4.2	5.1
	Fuel and light		4.3	8.1	4.5	3.2	1.5	18.6	14.3	4.4
		Of which: Kerosene	4.0	2.4	6.9	0.0	0.0	45.5	24.7	…
	Rent ^2/		5.7	0.0	0.0	0.0	0.0	0.0	0.0	0.0
	Miscellaneous		18.7	10.8	8.2	7.5	10.3	9.6	11.7	7.5
Colombo district consumer price index			100.0	…	7.4	7.3	3.6	3.6	10.3	8.1
	Food and Drinks		58.7	…	7.3	8.9	2.4	1.7	11.8	11.4
	Housing		13.3	…	4.4	3.3	4.3	2.6	0.9	0.3
	Fuel and Light		4.9	…	8.9	13.8	0.6	15.8	16.1	4.9
	Clothing and Foot Wear		6.2	…	10.1	2.4	1.9	1.6	5.2	3.2
	Liquor Tobacco and Betel and Arecanuts		4.4	…	14.1	7.6	22.0	12.4	10.1	0.1
	Personal Care and Health		3.8	…	14.4	5.8	4.1	4.1	9.8	6.9
	Transport		3.7	…	1.4	0.2	3.6	14.3	17.5	1.7
	Recreation and Education		2.8	…	4.6	1.2	1.9	2.2	14.4	11.5
	Miscellaneous		2.3	…	7.0	9.5	7.1	-0.9	8.0	17.5
Sri Lanka consumer price index ^3/			100.0	…	…	…	4.0	1.5	12.1	12.6
	Food, beverages, and tobacco		71.2	…	…	…	4.2	-0.7	12.1	13.2
	Clothing and footwear		4.0	…	…	…	3.5	1.1	3.7	8.5
	Housing, water, electricity, gas, & other fuels		13.1	…	…	…	1.6	9.1	11.5	8.6
	Furnishing, household equipment, & routine house maintenance		2.1	…	…	…	4.5	-13.6	15.4	19.9
	Health		2.4	…	…	…	5.9	18.2	12.4	24.9
	Transport		2.9	…	…	…	3.4	18.0	19.9	0.6
	Leisure, entertainment & culture		0.8	…	…	…	10.2	2.8	4.2	6.5
	Education		1.3	…	…	…	7.9	8.8	8.5	12.2
	Miscellaneous		2.1	…	…	…	5.3	3.3	19.2	19.1
Wholesale price index			100.0	20.5	6.9	6.1	-0.3	1.7	11.7	…
	Domestic goods		50.3	11.7	6.5	5.0	2.9	2.8	11.0	…
	Imports		27.2	11.6	8.2	0.1	-0.1	12.0	17.1	…
	Exports		22.5	40.4	6.7	10.9	-4.0	-5.3	9.2	…
Memorandum items
	Colombo consumer price index (end-period)		…	16.8	10.7	3.7	4.0	10.8	10.8	10.7
	Wholesale price index (end-period)			18.1	6.6	0.9	-0.5	4.8	14.7	…
	Sri Lanka consumer price index (end-period)			…	…	…	0.6	8.1	13.4	…

Source: Data provided by the Sri Lanka authorities.

^¹/Based on market prices.

^²/Low-income housing is under rent control.

^³/2002 data are for January-May.

Table 8.

Sri Lanka; Selected Wage and Employment Developments, 1996-2001

Source: Data provided by the Sri Lanka authorities.

^¹/Weighted average nominal wage for workers covered by Wage Boards; weights are based on the number employed in each trade as of end-December 1978.

^²/Average of initial salary grades for non-executive and minor employees, skilled and non-skilled; excludes school teachers.

^³/Takes into account the changes since 1987 owing to the Government’s privatization program.

^⁴/Includes employees of government ministries, school teachers, and defense personnel.

^⁵/Includes universities, public corporations, boards, and state-owned banks.

^⁶/The large increase in 1998 was partly due to the increase in coverage of female unpaid family workers in the agricultural sector. This is shown in the private sector ‘other’ category.

Table 8.

Sri Lanka; Selected Wage and Employment Developments, 1996-2001

			1996	1997	1998	1999	2000	2001 Prov.
			(Index, December 1978 = 100)
Nominal wages
	Minimum wage ^1/		801.7	849.1	953.3	977.6	1,000.4	1,057.6
		Agriculture	907.9	971.8	1,097.7	1,116.0	1,142.7	1,176.4
		Industry and commerce	682.8	710.8	807.7	829.2	857.2	919.7
		Services	559.7	487.2	506.4	559.7	559.7	657.6
		Government employees ^2/	818.2	906.5	1,001.4	1,001.4	1,084.7	1,310.8
Real wages
	Minimum wage		100.7	97.3	99.9	97.8	94.3	87.3
		Agriculture	113.9	111.4	115.0	111.7	107.7	97.1
		Industry and commerce	85.9	81.4	84.6	83.0	80.8	75.9
		Services	61.3	55.9	53.0	56.0	52.8	54.3
		Government employees	103.0	104.0	104.9	100.2	102.1	108.1
			(Annual average percentage change)
Real wages
	Minimum wage		-6.5	-3.4	2.7	-2.1	-3.6	-7.4
		Agriculture	-5.9	-2.2	3.2	-2.9	-3.6	-9.8
		Industry and commerce	-9.4	-5.2	3.9	-1.9	-2.7	-6.1
		Services	-7.8	-8.8	-5.2	5.7	-5.7	2.8
		Government employees	-10.7	1.0	0.9	-4.5	1.9	5.9
			(In thousands of persons)
Employment in the public sector ^3/			1,161	1,072	1,091	1,120	1,156	1,165
	Central government ^4/		752	762	790	822	857	864
	Quasi-governmental institutions ^5/		409	310	301	298	300	301
Employment in formal private sector			4,374	4,519	4,945	5,017	5,153	5,037
	Board of Investment (BOI) companies		242	258	294	327	368	391
	Other ^6/		4,132	4,261	4,651	4,690	4,785	4,646

Source: Data provided by the Sri Lanka authorities.

^¹/Weighted average nominal wage for workers covered by Wage Boards; weights are based on the number employed in each trade as of end-December 1978.

^²/Average of initial salary grades for non-executive and minor employees, skilled and non-skilled; excludes school teachers.

^³/Takes into account the changes since 1987 owing to the Government’s privatization program.

^⁴/Includes employees of government ministries, school teachers, and defense personnel.

^⁵/Includes universities, public corporations, boards, and state-owned banks.

^⁶/The large increase in 1998 was partly due to the increase in coverage of female unpaid family workers in the agricultural sector. This is shown in the private sector ‘other’ category.

Table 8.

Sri Lanka; Selected Wage and Employment Developments, 1996-2001

			1996	1997	1998	1999	2000	2001 Prov.
			(Index, December 1978 = 100)
Nominal wages
	Minimum wage ^1/		801.7	849.1	953.3	977.6	1,000.4	1,057.6
		Agriculture	907.9	971.8	1,097.7	1,116.0	1,142.7	1,176.4
		Industry and commerce	682.8	710.8	807.7	829.2	857.2	919.7
		Services	559.7	487.2	506.4	559.7	559.7	657.6
		Government employees ^2/	818.2	906.5	1,001.4	1,001.4	1,084.7	1,310.8
Real wages
	Minimum wage		100.7	97.3	99.9	97.8	94.3	87.3
		Agriculture	113.9	111.4	115.0	111.7	107.7	97.1
		Industry and commerce	85.9	81.4	84.6	83.0	80.8	75.9
		Services	61.3	55.9	53.0	56.0	52.8	54.3
		Government employees	103.0	104.0	104.9	100.2	102.1	108.1
			(Annual average percentage change)
Real wages
	Minimum wage		-6.5	-3.4	2.7	-2.1	-3.6	-7.4
		Agriculture	-5.9	-2.2	3.2	-2.9	-3.6	-9.8
		Industry and commerce	-9.4	-5.2	3.9	-1.9	-2.7	-6.1
		Services	-7.8	-8.8	-5.2	5.7	-5.7	2.8
		Government employees	-10.7	1.0	0.9	-4.5	1.9	5.9
			(In thousands of persons)
Employment in the public sector ^3/			1,161	1,072	1,091	1,120	1,156	1,165
	Central government ^4/		752	762	790	822	857	864
	Quasi-governmental institutions ^5/		409	310	301	298	300	301
Employment in formal private sector			4,374	4,519	4,945	5,017	5,153	5,037
	Board of Investment (BOI) companies		242	258	294	327	368	391
	Other ^6/		4,132	4,261	4,651	4,690	4,785	4,646

Source: Data provided by the Sri Lanka authorities.

^¹/Weighted average nominal wage for workers covered by Wage Boards; weights are based on the number employed in each trade as of end-December 1978.

^²/Average of initial salary grades for non-executive and minor employees, skilled and non-skilled; excludes school teachers.

^³/Takes into account the changes since 1987 owing to the Government’s privatization program.

^⁴/Includes employees of government ministries, school teachers, and defense personnel.

^⁵/Includes universities, public corporations, boards, and state-owned banks.

^⁶/The large increase in 1998 was partly due to the increase in coverage of female unpaid family workers in the agricultural sector. This is shown in the private sector ‘other’ category.

Table 9.

Sri Lanka: Labor Force, Employment, and Unemployment, 1996-2001 ^1/^2/

Source: Department of Census and Statistics, Labor Force Survey.

^¹/Annual data as of April, excluding northern and eastern provinces.

^²/Less than General Certificate of Education (Ordinary Level).

Table 9.

Sri Lanka: Labor Force, Employment, and Unemployment, 1996-2001 ^1/^2/

		1996	1997	1998	1999	2000	2001
		(In millions of persons)
Total labor force		6.24	6.27	6.66	6.67	6.83	6.86
	Male	4.19	4.17	4.30	4.40	4.50	4.56
	Female	2.03	2.06	2.27	2.27	2.33	2.30
	Urban	0.80	0.90	0.84	0.88	0.83	0.95
	Rural	5.41	5.33	5.73	5.79	6.00	5.91
Total employed		5.54	5.58	5.95	6.08	6.31	6.29
	Male	3.85	3.87	4.02	4.11	4.24	4.25
	Female	1.65	1.72	1.93	1.97	2.07	2.04
	Urban	0.71	0.80	0.76	0.80	0.76	0.87
	Rural	4.79	4.79	5.19	5.28	5.55	5.42
Total unemployed		0.71	0.65	0.62	0.59	0.52	0.57
	Male	0.34	0.30	0.28	0.29	0.26	0.31
	Female	0.38	0.34	0.34	0.30	0.26	0.26
	Urban	0.09	0.09	0.08	0.08	0.07	0.08
	Rural	0.62	0.54	0.54	0.51	0.45	0.48
		(In percent of labor force)
Unemployment rate		11.3	10.4	9.5	8.8	7.6	8.3
	Male	8.5	7.6	6.6	6.7	5.8	6.8
	Female	18.0	16.2	14.9	13.0	11.1	11.1
	Urban	11.7	10.4	9.7	9.5	8.1	8.9
	Rural	11.5	10.2	9.5	8.8	7.5	8.2
		(In percent of unemployed)
	Male	46.9	47.3	45.7	50.0	50.3	54.7
	Female	53.1	52.7	54.3	50.0	49.7	45.3
	Urban	13.1	14.6	13.0	14.1	12.9	14.9
	Rural	86.9	85.4	87.0	85.9	87.1	85.1
	Age 24 years or younger	64.5	60.8	60.9	64.5	64.0	62.9
	Less than 9 years of schooling ^2/	54.5	51.9	47.4	46.3	48.7	43.9

Source: Department of Census and S

I. Income Tax
Legislation:	Inland Revenue Act No. 38 of 2000
Implementation agency:	Department of Inland Revenue The global system is adopted in computing taxable income. Income from all sources computed according to the provisions of the Inland Revenue Act is considered as total statutory income from which certain specific deductions are made to arrive at the assessable income. Tax free allowance and qualifying payment allowance (on certain specific payments) are deducted from the assessable income to arrive at the taxable income. As a result of budget proposals 2002 interest on deposits (including interest on Government T Bills and T Bonds) and dividends received by noncompany entities are considered under a scheduler system.
Date of payment:	Any income tax shall be paid in four installments on or before the 15^th day respectively of August, November, February, in the year of assessment and 15^th May of the next year of assessment with the final payment on 30^th September.
A. Personal Income Tax
Tax free threshold:	Rs 240,000 per year (only for residents), w.e.f. 4/1/2002
Tax rates:
Taxable income	Rate
First Rs 180,000	10%
Next Rs 180,000	20%
Balance	35%
Effective: 4/1/2002
Terminal benefits on retirement:
	Rate
First Rs 1,000,000	Exempt
Next Rs 500,000	5%
Next Rs 500,000	10%
Balance	15%
Effective: 4/1/2002
Retiring gratuity:	Retiring gratuity in excess of Rs 1.8 million or average salary of last 3 years multiplied by number of years of service (whichever is more)—taxed as normal income. Compensation under approved voluntary retirement schemes or retrenchment-exempt.
Capital gains: (Also applicable to Corporate Income Tax)	Abolished from 4/1/2002
Rates of Depreciation: (Also applicable to Corporate Income Tax)
Type of Asset	Rate (%)
Plant, machinery or fixtures	50
Motor vehicles or office furniture	25
Qualified buildings	6.67
Motor coaches used for transport of employees	100
Information technology equipment of employees and software	100
B. Corporate Income Tax
Tax rates:
	Rate (%)
Taxable Income < Rs. 5Mn	20%
Taxable Income > Rs. 5Mn	35%
Exports, Tourism, Construction and Agriculture	15%
Provident Funds, Charities	10%
Clubs and Associations	20%
Quoted Company (with 300 shareholders or more) would receive a 5% tax credit
Advanced Company Tax (Act):	Abolished from 4/1/2002
Withholding taxes:
	Rate (%)
On interest, royalties paid out of Sri Lanka	20
Interest paid in Sri Lanka (on deposits) including investments in government bonds and securities	10
This is final tax in case of noncompany entities Dividends (4/1/2002)	10
This is final tax in case of noncompany entities on specified fees paid to specified persons	5
On nonresidential rent income	Rs 50,000
II. Goods and Services Tax (GST)
Legislation:	Goods and Services Tax Act No.34 of 1996 and Amendment Act No: 11 of 1998, No.26 of 2000 and No.05 of 2001
Implementing agency:	Department of Inland Revenue
Date of payment:	Payable on or before the last day of the month following the end of the taxable period (month or quarter)
GST threshold:	Turnover in excess of Rs 500,000 in any quarter ending on die month of March, June, September, December. In excess of Rs 1,800,000 in any four successive quarters. However, there is no threshold for imports.
Tax liability:	On taxable supplies of goods or services made in Sri Lanka, and On the importation of goods taxable into Sri Lanka
Tax rates:	Standard rate of 12.5 per cent on all taxable supplies of goods and services and import of goods Zero rate Export of goods International transportation Services directly connected with any moveable or immovable property outside Sri Lanka GST on inputs for zero rated and taxable goods and services are refundable.
Exemptions:	Essential food items, i.e., rice, flour sugar, milk and milk powder, bread, dried fish etc. Coconut, paddy, tea, potatoes, onion, chillies, etc. Pharmaceutical products & health care Petroleum products, fertilizer Public passenger transport Financial services, etc.
Computation of GST:	On manufacturing, sale price excluding GST and NSL multiplied by the GST rate On services, final consumer price, excluding GST and NSL, multiplied by the GST rate On imports, C1F with all fiscal levies, excluding GST and NSL, multiplied by the GST rate Abolished with introduction of VAT on 08/01/2002
III. National Security Levy (NSL)
Legislation:	The NSL is imposed under the National Security Levy Act No. 52 of 1991 as amended from time to time.
Implementing agency:	Department of Inland Revenue
Date of payment:	Returns to be furnished on a quarterly basis and payment should be settled monthly basis.
NSL threshold:	There is no threshold for NSL except for service providers. Service providers whose turnover in excess of Rs. 100,000 per quarter or over are liable.
Tax liability:	Manufacturers, importers and many service providers including insurance, banking, finance & telecommunications.
Tax rates:
Standard rate	6.5%
Concessionary rate for
Import or manufacture of
Plant, machinery & equipment	0.5%
Exemptions:	Exports Re-exports Imports to manufacture exportable goods Essential services and services related to exports
Computation of NSL:	Domestic: Sale price including NSL tax amount multiplied by the NSL rate: E.g., Price inclusive NSL X 6.5 % = 93.5 Note: Sale price should be adjusted by removing Excise (Sp. Pr) Duty where applicable. Imports: The aggregate of CIF value, customs duty (CD) and 25 per cent mark up of CIF value and CD to be multiplied by the NSL rate. E.g. 125% (CIF+CD) X NSL rate Abolished on 08/01/2002 with introduction of VAT.
IV. Value-Added Tax (VAT)
Legislation;	Value-Added Tax Act
Implementing agency:	Department of Inland Revenue
Date of payment:	Payable on or before the last day of the month following the end of me taxable period (month or quarter).
VAT threshold:	Turnover in excess of Rs 500,000 in any quarter ending on the month of March, June, September, December. In excess of Rs 1,800,000 in any four successive quarters. However, there is no threshold for imports.
Tax liability:	On taxable supplies of goods or services made in Sri Lanka, and On the importation of taxable goods into Sri Lanka
Tax rates:
Lower rat	10%
Standard rate	20%
Exemptions:	Essential food items, i.e., rice, flour, milk, bread, fish, vegetables, etc. Coconut, paddy, tea, potatoes, onion, chillies, etc. Public passenger transport Financial services, etc.
Computation of VAT:	On manufacturing, sale price excluding VAT multiplied by the VAT rate On services, final consumer price, excluding VAT multiplied by the VAT rate On imports, CIF with the addition of duty any surcharge, cess and any excise duty payable and multiplied the VAT rate Effective from 8/1/2002
V. Stamp Duty
Stamp duty:	Abolished from 5.1.2002, However, stamp duty devolved to the Provincial Councils remains unchanged.
VI. Customs Duty
Legislation:	Customs Ordinance No.17 of 1869 as amended from time to time.
Implementing agency:	Department of Customs
Tax liability:	Customs duty is levied on the CIF value of all goods, wares and merchandise imported into Sri Lanka. Zero duty-Live fish, live plants, wheat grain, seeds, petroleum, crude oil, pharmaceuticals, fertilizer, wood, wood pulp, books, yarn, sewing thread, fabrics, pearls, diamonds, precious stones, gold, silver, platinum, heavy machinery for construction works, tractors, buses, refrigerated trucks, lorries, medical, dental, and veterinary instruments and appliances, maize, news prints, raw materials. Standard rate bands: 5% - Machinery 10% - Intermediate goods 25% - Finished products 35% - Vegetable (frozen), Green gram, T/dhal, Cowpea
Computation of duty:	Duty rate is applied on CIF value or quantity of imports. CD = value of CIF X Rate of Customs Duty or = Quantity X unit rate of duty
Date of payment:	At the point of import.
VII. Turnover Tax
Legislation:	Turnover Act Mo. 69 of 1981 as amended from time to time.
Implementing agency:	Department of Inland Revenue. Turnover Tax on wholesale and retail trade is devolved to the provincial councils.
Tax liability:	TT is applicable to banking & financial services which are not liable to GST. However, turnover of wholesalers or retailers is liable to TT and is collected by the Provincial Councils.
Tax rates:
Bankers, Financiers, Money Lenders, Pawn brokers	1%
Trade (payable to Provincial Councils)	l%-5%
VIII. Excise (Special Provisions) Duty
Legislation:	Excise (Special Provisions) Act No: 13 of 1989 and Amendments Act No. 40 of 1990 and Act No. 8 of 1994.
Implementing agency:	Excise (Special Provisions) unit of Department of Customs.
Tax liability:	On the following articles manufactured locally or imported.
Tax rates:
Cigarettes
60 mm in length		Rs 1,300 per 1,000 sticks
60 mm - 67 mm		Rs 3,142 per 1,000 sticks
67 mm - 72 mm		Rs 4,503 per 1,000 sticks
72 mm - 84 mm		Rs 4,965 per 1,000 sticks
84 mm		Rs 5,156 per 1,000 sticks
Pipe tobacco		Rs 250/- per kg
Diesel		Rs 6.50/- per liter
Petrol		Rs.30 per liter
Motor vehicle
	Petrol cars	15%
	Diesel cars	65%
Vans		35%
w.e.f. 3/22/2002
Computation of duty:	Domestic: Wholesale price excluding excise (Special Provisions) duty multiplied by the excise (Special Provisions) duty rate. Imports: 105% of CIF with all fiscal levies, excluding excise (Special Provisions) duty, multiplied by the excise (Special Provisions) duty rates.
Date of payment:	Cigarettes & Petroleum
products	monthly
Liquor	quarterly
Imports	at the point of import
IX. Excise (Ordinance) Duty
Legislation:	Excise Ordinance No. 8 of 1912 and subsequent amendments.
Implementing agency:	Department of Excise
Tax liability:	Domestically produced hard & soft liquor only.
Tax rates:
Coconut and processed Arrack	Rs 299.00 per proof litre
Country Made Foreign Liquor	Rs 399.00 per proof litre
Molasses and Palmyrah Arrack	Rs 299.00 per proof litre
Malt liquor above 5% in strength	Rs 25 per litre
Malt liquor less than 5% in strength	Rs 15 per litre
Wine containing more than 4% in Strength per proof liter	Rs 149
w.e.f. 3/22/2002
X. Luxury and Diesel Motor Vehicle Tax
Legislation:	The motor vehicle levy was introduced in Sri Lanka by the Finance Act No. 16 of 1995 and implemented from 1^st April 1995.
Implementing agency:	Department of Motor Traffic
Tax liability:	An annual levy of Rs 5,000 on diesel motor vehicles. Luxury motor vehicles as classified below are also liable to a levy which is imposed on an annual depreciation over a period of 7 years.
Tax rates:
Vehicle Type	Capacity	Levy in the First Year
Luxury	Diesel-exceeding 2500cc	50,000/-
	Petrol-exceeding 2000c
Semi luxury	Diesel-2200cc-2500cc
	Petrol-1800cc-2000cc	25,000/-
Semi luxury dual purpose, excluding vans	Diesel-exceeding 2500cc	10,000/-
	Petrol-exceeding 2000cc
XI. Ports and Airports Development Levy (Effective from 05/01/2002)
Legislation:	Finance Act
Implementing agency:	Department of Customs
Tax liability:	A levy at the rate of one per centum on the cost, insurance and freight value of imported article. A concessionary levy at the rate of 0.75 per centum on the articles imported for processing and re-export.
Exemptions:	Imports by any diplomatic mission or any other organization within the provisions of Diplomatic Privileges Act No. 9 of 1996. Imports of diamonds, gems, gold, jewelry and any electronic items or components import for processing and re-export.
XII. Betting and Gaming Levy
Legislation:	Betting and Gaming Levy Act No. 40 of 1990
Implementing agency:	Department of Inland Revenue
Tax liability:
Gaming	Rs. 12 million per year
Bookmaking, with live telecast	Rs. 500,000 per year
Bookmaking, without live telecast	Rs 10,000 per year
XIII. Debits Tax (Effective from 01/06/2002)
Legislation:	Debits Tax Act (awaits parliamentary approval)
Implementing agency:	Department of Inland Revenue
Tax liability:	The Debits Tax at the rate of one tenth of one per centum (0.1%) will be charged on all debits on current account transactions, proceeds realized by the encashment of certificates of deposits and travelers cheques.
Exemptions:	If tax liability of a current account during a particular month is not more than Rs. 10. Debits made on tax payments and loan /interest payments to die government Payments in relation to: pension fund benefits settlement of transactions for licensed produce brokers trading in government securities for primary dealers outright and repurchase and reverse repurchase transactions of government and corporate debt securities in the secondary market settlement of transactions in the Colombo Stock Exchange Debits in relation to: inter- and intra-bank transactions collection accounts any exempt account dishonored cheques and error corrections

I. Income Tax
Legislation:	Inland Revenue Act No. 38 of 2000
Implementation agency:	Department of Inland Revenue The global system is adopted in computing taxable income. Income from all sources computed according to the provisions of the Inland Revenue Act is considered as total statutory income from which certain specific deductions are made to arrive at the assessable income. Tax free allowance and qualifying payment allowance (on certain specific payments) are deducted from the assessable income to arrive at the taxable income. As a result of budget proposals 2002 interest on deposits (including interest on Government T Bills and T Bonds) and dividends received by noncompany entities are considered under a scheduler system.
Date of payment:	Any income tax shall be paid in four installments on or before the 15^th day respectively of August, November, February, in the year of assessment and 15^th May of the next year of assessment with the final payment on 30^th September.
A. Personal Income Tax
Tax free threshold:	Rs 240,000 per year (only for residents), w.e.f. 4/1/2002
Tax rates:
Taxable income	Rate
First Rs 180,000	10%
Next Rs 180,000	20%
Balance	35%
Effective: 4/1/2002
Terminal benefits on retirement:
	Rate
First Rs 1,000,000	Exempt
Next Rs 500,000	5%
Next Rs 500,000	10%
Balance	15%
Effective: 4/1/2002
Retiring gratuity:	Retiring gratuity in excess of Rs 1.8 million or average salary of last 3 years multiplied by number of years of service (whichever is more)—taxed as normal income. Compensation under approved voluntary retirement schemes or retrenchment-exempt.
Capital gains: (Also applicable to Corporate Income Tax)	Abolished from 4/1/2002
Rates of Depreciation: (Also applicable to Corporate Income Tax)
Type of Asset	Rate (%)
Plant, machinery or fixtures	50
Motor vehicles or office furniture	25
Qualified buildings	6.67
Motor coaches used for transport of employees	100
Information technology equipment of employees and software	100
B. Corporate Income Tax
Tax rates:
	Rate (%)
Taxable Income < Rs. 5Mn	20%
Taxable Income > Rs. 5Mn	35%
Exports, Tourism, Construction and Agriculture	15%
Provident Funds, Charities	10%
Clubs and Associations	20%
Quoted Company (with 300 shareholders or more) would receive a 5% tax credit
Advanced Company Tax (Act):	Abolished from 4/1/2002
Withholding taxes:
	Rate (%)
On interest, royalties paid out of Sri Lanka	20
Interest paid in Sri Lanka (on deposits) including investments in government bonds and securities	10
This is final tax in case of noncompany entities Dividends (4/1/2002)	10
This is final tax in case of noncompany entities on specified fees paid to specified persons	5
On nonresidential rent income	Rs 50,000
II. Goods and Services Tax (GST)
Legislation:	Goods and Services Tax Act No.34 of 1996 and Amendment Act No: 11 of 1998, No.26 of 2000 and No.05 of 2001
Implementing agency:	Department of Inland Revenue
Date of payment:	Payable on or before the last day of the month following the end of the taxable period (month or quarter)
GST threshold:	Turnover in excess of Rs 500,000 in any quarter ending on die month of March, June, September, December. In excess of Rs 1,800,000 in any four successive quarters. However, there is no threshold for imports.
Tax liability:	On taxable supplies of goods or services made in Sri Lanka, and On the importation of goods taxable into Sri Lanka
Tax rates:	Standard rate of 12.5 per cent on all taxable supplies of goods and services and import of goods Zero rate Export of goods International transportation Services directly connected with any moveable or immovable property outside Sri Lanka GST on inputs for zero rated and taxable goods and services are refundable.
Exemptions:	Essential food items, i.e., rice, flour sugar, milk and milk powder, bread, dried fish etc. Coconut, paddy, tea, potatoes, onion, chillies, etc. Pharmaceutical products & health care Petroleum products, fertilizer Public passenger transport Financial services, etc.
Computation of GST:	On manufacturing, sale price excluding GST and NSL multiplied by the GST rate On services, final consumer price, excluding GST and NSL, multiplied by the GST rate On imports, C1F with all fiscal levies, excluding GST and NSL, multiplied by the GST rate Abolished with introduction of VAT on 08/01/2002
III. National Security Levy (NSL)
Legislation:	The NSL is imposed under the National Security Levy Act No. 52 of 1991 as amended from time to time.
Implementing agency:	Department of Inland Revenue
Date of payment:	Returns to be furnished on a quarterly basis and payment should be settled monthly basis.
NSL threshold:	There is no threshold for NSL except for service providers. Service providers whose turnover in excess of Rs. 100,000 per quarter or over are liable.
Tax liability:	Manufacturers, importers and many service providers including insurance, banking, finance & telecommunications.
Tax rates:
Standard rate	6.5%
Concessionary rate for
Import or manufacture of
Plant, machinery & equipment	0.5%
Exemptions:	Exports Re-exports Imports to manufacture exportable goods Essential services and services related to exports
Computation of NSL:	Domestic: Sale price including NSL tax amount multiplied by the NSL rate: E.g., Price inclusive NSL X 6.5 % = 93.5 Note: Sale price should be adjusted by removing Excise (Sp. Pr) Duty where applicable. Imports: The aggregate of CIF value, customs duty (CD) and 25 per cent mark up of CIF value and CD to be multiplied by the NSL rate. E.g. 125% (CIF+CD) X NSL rate Abolished on 08/01/2002 with introduction of VAT.
IV. Value-Added Tax (VAT)
Legislation;	Value-Added Tax Act
Implementing agency:	Department of Inland Revenue
Date of payment:	Payable on or before the last day of the month following the end of me taxable period (month or quarter).
VAT threshold:	Turnover in excess of Rs 500,000 in any quarter ending on the month of March, June, September, December. In excess of Rs 1,800,000 in any four successive quarters. However, there is no threshold for imports.
Tax liability:	On taxable supplies of goods or services made in Sri Lanka, and On the importation of taxable goods into Sri Lanka
Tax rates:
Lower rat	10%
Standard rate	20%
Exemptions:	Essential food items, i.e., rice, flour, milk, bread, fish, vegetables, etc. Coconut, paddy, tea, potatoes, onion, chillies, etc. Public passenger transport Financial services, etc.
Computation of VAT:	On manufacturing, sale price excluding VAT multiplied by the VAT rate On services, final consumer price, excluding VAT multiplied by the VAT rate On imports, CIF with the addition of duty any surcharge, cess and any excise duty payable and multiplied the VAT rate Effective from 8/1/2002
V. Stamp Duty
Stamp duty:	Abolished from 5.1.2002, However, stamp duty devolved to the Provincial Councils remains unchanged.
VI. Customs Duty
Legislation:	Customs Ordinance No.17 of 1869 as amended from time to time.
Implementing agency:	Department of Customs
Tax liability:	Customs duty is levied on the CIF value of all goods, wares and merchandise imported into Sri Lanka. Zero duty-Live fish, live plants, wheat grain, seeds, petroleum, crude oil, pharmaceuticals, fertilizer, wood, wood pulp, books, yarn, sewing thread, fabrics, pearls, diamonds, precious stones, gold, silver, platinum, heavy machinery for construction works, tractors, buses, refrigerated trucks, lorries, medical, dental, and veterinary instruments and appliances, maize, news prints, raw materials. Standard rate bands: 5% - Machinery 10% - Intermediate goods 25% - Finished products 35% - Vegetable (frozen), Green gram, T/dhal, Cowpea
Computation of duty:	Duty rate is applied on CIF value or quantity of imports. CD = value of CIF X Rate of Customs Duty or = Quantity X unit rate of duty
Date of payment:	At the point of import.
VII. Turnover Tax
Legislation:	Turnover Act Mo. 69 of 1981 as amended from time to time.
Implementing agency:	Department of Inland Revenue. Turnover Tax on wholesale and retail trade is devolved to the provincial councils.
Tax liability:	TT is applicable to banking & financial services which are not liable to GST. However, turnover of wholesalers or retailers is liable to TT and is collected by the Provincial Councils.
Tax rates:
Bankers, Financiers, Money Lenders, Pawn brokers	1%
Trade (payable to Provincial Councils)	l%-5%
VIII. Excise (Special Provisions) Duty
Legislation:	Excise (Special Provisions) Act No: 13 of 1989 and Amendments Act No. 40 of 1990 and Act No. 8 of 1994.
Implementing agency:	Excise (Special Provisions) unit of Department of Customs.
Tax liability:	On the following articles manufactured locally or imported.
Tax rates:
Cigarettes
60 mm in length		Rs 1,300 per 1,000 sticks
60 mm - 67 mm		Rs 3,142 per 1,000 sticks
67 mm - 72 mm		Rs 4,503 per 1,000 sticks
72 mm - 84 mm		Rs 4,965 per 1,000 sticks
84 mm		Rs 5,156 per 1,000 sticks
Pipe tobacco		Rs 250/- per kg
Diesel		Rs 6.50/- per liter
Petrol		Rs.30 per liter
Motor vehicle
	Petrol cars	15%
	Diesel cars	65%
Vans		35%
w.e.f. 3/22/2002
Computation of duty:	Domestic: Wholesale price excluding excise (Special Provisions) duty multiplied by the excise (Special Provisions) duty rate. Imports: 105% of CIF with all fiscal levies, excluding excise (Special Provisions) duty, multiplied by the excise (Special Provisions) duty rates.
Date of payment:	Cigarettes & Petroleum
products	monthly
Liquor	quarterly
Imports	at the point of import
IX. Excise (Ordinance) Duty
Legislation:	Excise Ordinance No. 8 of 1912 and subsequent amendments.
Implementing agency:	Department of Excise
Tax liability:	Domestically produced hard & soft liquor only.
Tax rates:
Coconut and processed Arrack	Rs 299.00 per proof litre
Country Made Foreign Liquor	Rs 399.00 per proof litre
Molasses and Palmyrah Arrack	Rs 299.00 per proof litre
Malt liquor above 5% in strength	Rs 25 per litre
Malt liquor less than 5% in strength	Rs 15 per litre
Wine containing more than 4% in Strength per proof liter	Rs 149
w.e.f. 3/22/2002
X. Luxury and Diesel Motor Vehicle Tax
Legislation:	The motor vehicle levy was introduced in Sri Lanka by the Finance Act No. 16 of 1995 and implemented from 1^st April 1995.
Implementing agency:	Department of Motor Traffic
Tax liability:	An annual levy of Rs 5,000 on diesel motor vehicles. Luxury motor vehicles as classified below are also liable to a levy which is imposed on an annual depreciation over a period of 7 years.
Tax rates:
Vehicle Type	Capacity	Levy in the First Year
Luxury	Diesel-exceeding 2500cc	50,000/-
	Petrol-exceeding 2000c
Semi luxury	Diesel-2200cc-2500cc
	Petrol-1800cc-2000cc	25,000/-
Semi luxury dual purpose, excluding vans	Diesel-exceeding 2500cc	10,000/-
	Petrol-exceeding 2000cc
XI. Ports and Airports Development Levy (Effective from 05/01/2002)
Legislation:	Finance Act
Implementing agency:	Department of Customs
Tax liability:	A levy at the rate of one per centum on the cost, insurance and freight value of imported article. A concessionary levy at the rate of 0.75 per centum on the articles imported for processing and re-export.
Exemptions:	Imports by any diplomatic mission or any other organization within the provisions of Diplomatic Privileges Act No. 9 of 1996. Imports of diamonds, gems, gold, jewelry and any electronic items or components import for processing and re-export.
XII. Betting and Gaming Levy
Legislation:	Betting and Gaming Levy Act No. 40 of 1990
Implementing agency:	Department of Inland Revenue
Tax liability:
Gaming	Rs. 12 million per year
Bookmaking, with live telecast	Rs. 500,000 per year
Bookmaking, without live telecast	Rs 10,000 per year
XIII. Debits Tax (Effective from 01/06/2002)
Legislation:	Debits Tax Act (awaits parliamentary approval)
Implementing agency:	Department of Inland Revenue
Tax liability:	The Debits Tax at the rate of one tenth of one per centum (0.1%) will be charged on all debits on current account transactions, proceeds realized by the encashment of certificates of deposits and travelers cheques.
Exemptions:	If tax liability of a current account during a particular month is not more than Rs. 10. Debits made on tax payments and loan /interest payments to die government Payments in relation to: pension fund benefits settlement of transactions for licensed produce brokers trading in government securities for primary dealers outright and repurchase and reverse repurchase transactions of government and corporate debt securities in the secondary market settlement of transactions in the Colombo Stock Exchange Debits in relation to: inter- and intra-bank transactions collection accounts any exempt account dishonored cheques and error corrections

Topics

Countries

Series

About

Resources

Abstract

V. Tax Policy Developments, 200238

A. Value Added Tax

B. Individual Income Tax

C. Corporate Income Tax

D. Taxes on Financial Transactions

E. Trade Taxes

F. Excise Taxes

G. Other Tax Policy Changes

H. Tax Administration

ANNEX V.1 Tax Summary

ANNEX V.2

Statistical Appendix

V. Tax Policy Developments, 2002³⁸