ECONOMYNEXT – Sri Lanka’s main accounting organisation has urged the government to reduce tax exemptions and simplify the tax system in its revenue proposals submitted ahead of the forthcoming budget.
“We suggested that tax exemptions be minimised,” said Arjuna Herath, president of the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka).
“We don’t want to encourage people to live on subsidies and tax exemptions. Business should be made not on them but on real business cases.”
CA Sri Lanka has also suggested that current tax rates for personal and corporate bodies be maintained.
“We should not deviate too much as we are progressive and competitive with regional and international rates which can be an encouragement for investment and foreign business ventures,” Herath told a news conference.
CA Sri Lanka had proposed the government move to two rates of corporate taxes when it presents its budget for 2016 next month.
“Multiple rates can complicate revenue and tax collection,” Herath said. “We suggest the government moves to a two tier corporate tax system. For ‘thrust industries’ like exports it can be a lower rate.”
The Nation Building Tax should also be consolidated with Value Added Tax.
“We said make it a VAT rate. Then it gets simplified with one tax rate.”
CA Sri Lanka also wants to discourage recent moves by the government to move from the Inland Revenue Department to various government agencies for revenue collection.
One example was a new telecommunications tax that was supposed to be collected by the Telecommunications Regulatory Commission.
“The land alienation act passed recently discourages foreign investment,” Herath also said. “It must be looked at carefully as it can be an impediment for foreign direct investment.
“We suggest allowing foreigners to buy and gold land. If at all some restrictions are necessary, considering that land is a national asset base, it should not be broad restrictions as we have currently.” (Colombo/October 21 2015)