The tax policy in Sri Lankan has seen a paradigm shift after the budget last year, but the end game is all in the balancing act for all parties concerned, according to a tax expert.
“The taxes that were introduced by the budget last year which came into effect on April 1, are far-reaching, courageous things but the balancing part is a challenge,” R. Gajendran, Partner Gajma and Company told a gathering of senior executives at the Sunday Times Business Club meeting last week.
He said that the government servants are taxed now – after 33 years, which is a bold decision. “It is also business- friendly as some tax rates have come down and the small and medium enterprises are also focussed,” he added. but he stressed that in a bid to get the optimal effect of the budget proposals, the combination has to be derived right – be it the tax payer, the ‘tax man’ (Inland Revenue) or the policy makers.
He said that it’s a good thing that for profits and income earned in foreign currency exemptions will not apply for commission, discount or similar receipt for any such service rendered in Sri Lanka.
“Exemption from income tax of the profits and income of any undertaking for fishing, institution wise exemptions in Ceylon Electricity Board, National Water Supply and Drainage Board, Ceylon Petroleum Corporation, Sri Lanka Ports Authority, etc is specified. Also the present exemption on income from interest available to Senior Citizens on monies deposited in state banks will be extended from Rs. 200,000 to Rs. 500,000 from April 1," he added.
He said that exemption from income tax on official emoluments earned in Sri Lanka by non-nationals participating in any international event conducted in Sri Lankan such as the cricketers is also stipulated in the last budget. He noted that exemption from income tax of the profits and income of any undertaking for fishing (which is for cleaning, sizing, sorting, grading, chilling, dehydrating, packaging cutting or canning of fish in preparation of such produce for the market) is also encouraging this industry. He added that the present rates of 30%, 33 1/3% or 35% applicable to companies or NGOs etc, other than any person engaged in a business which deals in liquor or tobacco based products (being the manufacturer or the importer of such products), will be reduced to 28%. Mr. Gajendran said that the expenditure, including capital expenditure incurred by a person in carrying on any scientific, industrial, agricultural or any other research for the upgrading of any trade or business will be extended by allowing a double deduction (an amount equal to 200%), so far as such research is conducted within Sri Lanka through an institution established for research purposes. “This is to encourage research in the country,” he added.
Any expenditure incurred in any year of assessment quoting any shares of a company in any official list of the stock exchange, Mr. Gajendran said is a positive thing which will spur more Initial Public Offerings in the country. The club is hosted by Taj Samudra Hotel and co-sponsored by Hameedia. |
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