Flat 15% withholding tax on dividend payments from January

A flat 15 percent withholding tax will be imposed on dividend payments and it will be considered as the final tax on dividends, with effect from January 1, 2023.

This is expected to avert double taxation on dividends distributed to investors.
Following the passing of Inland Revenue (Amendment) Act No.45 of 2022, Fiscal Policy Department Director General Dr. Kapila Senanayake last week remarked that the dividends distributed by a resident company would be considered as a final withholding payment, with effect from January 1, 2023 and hence, the investors wouldn’t be liable to pay further taxes.

Therefore, he noted that the investors wouldn’t come under double taxation on dividend payments.
Meanwhile, the Capital Gain Tax (CGT) applicable on the realisation of investment assets by a company is increased to 30 percent, from 10 percent retrospectively, with effect from October 1, 2022.
The IRD is expected to issue guidelines for the collection of additional CGT during the interim period.