Colombo: Sri Lanka's new government has announced sweeping tax cuts and reforms in a bid to provide relief to the masses ahead of parliamentary elections scheduled for early next year.
The Cabinet decided Wednesday to cut the value added tax to 8% from 15%, effective December 1, and to abolish seven other taxes, including a 2% nation building tax paid by businesses.
The Cabinet also announced that all religious institutions are exempted from taxes.
The government's information department said the decisions were made in the first Cabinet meeting since Gotabaya Rajapaksa was elected as president.
It said that apart from the VAT tax cut, other changes were to take effect immediately.
Rajapaksa promised sweeping tax relief during the recent presidential election. He also vowed to strengthen national security and revive the fragile economy.
The island nation's ailing economy suffered a severe blow due to an Easter Sunday attack by Islamic extremists that left more than 260 dead and nearly 500 wounded.
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