Colombo, Dec 19: President Anura Kumara Dissanayake on Wednesday announced that Sri Lanka had secured flexibility with the IMF on its rigid state income tax regime, which was part of his election promise.

Additionally, the importation of passenger cars – banned from 2020 – would be allowed from February 2025, Dissanayake, who is also finance minister, told parliament.

Speaking about the agreements reached with the International Monetary Fund (IMF) during the third review of the $2.9 billion Expanded Financing Facility (EFF), the President said his government had succeeded in raising the tax threshold.

“We were able to raise the salary as you earn tax threshold (PAYE tax) so that those with higher incomes pay more while those who earn pay less,” Dissanayake said, adding that There would be other exemptions from VAT and withholding taxes on income. interest income for retirees.

“Income of Rs 1,50,000 per month will be tax free,” Dissanayake said referring to the current free amount up to just Rs 1,00,000.

Having just returned from an official visit to India, Dissanayake declared that the ban on vehicle imports would be gradually lifted.

“Since December 14, we have allowed the importation of the first category – passenger transport vehicles and special purpose cars.”

From February 2025, all imports of passenger cars would be permitted.

Sri Lanka had stopped vehicle imports from 2020 during the Covid19 outbreak due to dwindling foreign exchange reserves.

With the economic recovery thanks to the IMF bailout since 2023, the IMF has authorized vehicle imports avoiding any negative impact on the need to build foreign exchange reserves.