Sri Lanka makes it more difficult to start and run a business in Budget2016
Nov 20, 2015 23:14 PM GMT+0530 | 0 Comment(s)
ECONOMYNEXT - Sri Lanka has put in number of new regulations and processes to start a business and keep and incorporated body alive, in a budget for 2016.
"It has been noted that most of the registered companies are not functioning," Finance Minister Ravi Karunanayake said in a budget for 2016.
"In order to make such companies activated, I propose to impose an annual fee on all the registered
companies collectible by the Registrar of Companies.
"Further in order to discourage voluntary registration, I propose to charge Rs. 500,000/- on voluntary liquidation of companies."
In Sri Lanka it is already extremely expensive to incorporate a business, which the basic documentation and secretarial filing expenses running into 50,000 to 80,000 rupees.
An enterprising person in a country like Vietnam will use such funds as capital to start a business, which is used up as fees in Sri Lanka.
In Delaware, USA where most the major US firms are incorporated, due its superior corporate law, a small firm can be set up for a fee of 89 dollars with the secretarial firm charging fees from around 80 dollar upwards (Delaware fee schedule).
There are additional fees based on issued stock but 1,500 no par stock can be issued free.
Under the budget proposal there is an annual fee of 60,000 rupees for private companies, 500,000 for public companies and 100,000 for other companies, perhaps making Sri Lanka quite a difficult place to start and a very expensive place to maintain an incorporated body.
The US is an extremely business friendly country, where most of the innovations happen and immigrants from all over the world come and set up firms selling new goods and services in a highly competitive environment.
In Singapore, a country which scores high in 'ease of doing business' a company can be incorporated for 300 Singapore dollar (about 30,000 rupees). The online registry promises incorporation within 15 minutes.
"With effect from January 01, 2016, all business entities should be registered with their respective local councils at a nominal fee of Rs. 100 per year," Karunanayake said putting fresh burdens on those trying to start a business.
"For new business entities, thisregistration would be a pre requisite to obtain the electricity and water connections, and loan facilities from Banks."
Local government offices are among the most corrupt in Sri Lanka where bribes are demanded for anything from land division to a housing approval and citizens who are not willing to pay bribes are sent from pillar to post for months.