ECONOMYNEXT – Sri Lanka parliament’s Committee on Public Finance had denied approval for tax breaks given to a foreign investment project over the failure of the Board of Investment to given an analysis of the benefit and impact on the economy.
Under Sri Lanka’s Strategic Development Act, unusually long tax breaks can be given to companies unlike other tax laws where rules pre-set and predictable. Under a plan to raise Sri Lanka’s tax collection the SDA was at one time suspended.
The SDA has unusual tax breaks including excluding expatriate executives from income tax, where they could be taxed in their home countries when there are double taxation treaties instead of in Sri Lanka.
The practice of freeing expatriate workers from income tax was started during a previous Rajapaksa regime.
The Committee of Public Finance had no problem with the investor of the giving tax concessions but approval for the gazette giving a 12 year tax holiday and other concessions was not give because the Board of Investment had failed to give an analysis on the economic benefits.
Chairman of the Public Finance Committee had asked for a full analysis at the next meeting of the committee on Public Finance on October 04.