Sri Lanka says to halve agri taxes, 5-yr tax holiday to small firms
ECONOMYNEXT – Sri Lanka’s finance ministry said the government plans to give a five-year tax exemption to agricultural-based small and medium industry and slash
income tax rate on processing industries using local agricultural commodities to 14 percent from 28 percent amid a political crisis.
A statement said the move is to promote agricultural production in the country for exports and consumption purposes.
It also announced the government proposed to raise the threshold for the application of Economic Service Charge (ESC) from 12.5 million rupees per quarter to 50 million rupees per quarter to help small holder businesses.
“Agricultural income generated specially by the small scale entrepreneurs in the cultivation of any agricultural produce such as tea, spices, coconut, rubber, paddy, fruits, and vegetables (are) to be exempted from income taxation for a period of 5 years.”
The government also proposed that expenditure on transition to renewable energy sources including installation of solar panels, in tea, rubber, coconut, rice and other agricultural processing factories is to be recognized as deductible expenses in the computation of taxable profits, the ministry said.
The statement said Mahinda Rajapaksa, proposes to introduce some specific measures towards providing incentives that will enable SMEs and small sector business activities to revive rapidly, the statement said.
The Treasury has already been directed to design a package that will support SME entrepreneurs in the short run to be able to access finance and revive their businesses, the statement said.
Tax changes require parliamentary approval. Rajapaksa has already suffered two no-confidence motions in parliament. (COLOMBO, 23 November 2018).