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Sri Lanka undeclared funds tax, special GST to be legislated by April: Treasury Secy

ECONOMYNEXT – Sri Lanka tax changes announced in 2019 December and a budget for 2021 including a special goods and services tax and a 1 percent tax to bring undeclared money to the open would be legislated by April 21, Treasury Secretary S R Attygalle said.

Sri Lanka cut the value added tax, lifted the threshold, announced a special goods and services tax for 5 items and also a series of income tax cut to promote exports and support small and medium enterprises.

Some changes have been drafted, or were with the legal draftsman.

“We will send them to the cabinet and have them legislated by the beginning of the next tax year by April,” Attygalle said.

Anyone who had undeclared funds could also bring them out and invest in certain areas by paying a 1 percent tax.

Sri Lanka had lowered income taxes and was also hoping to focus on the large tax payer unit to bring more revenues.

Despite lower rates and a Covid-19 pandemic, income tax collections in the 2021 first quarter relating to business performance of the prior quarter had exceeded last year’s levels, he said.

The government wanted to keep the current tax rates without changing for 5 years, to give stability, Attygalle said.

Though income tax cuts boosts investment and jobs allowing the most productive companies to grow, there had been concern over the cutting of value added tax, without an equivalent trimming of state as more borrowings tend to push up interest rates.

Any attempt to keep rates down with central bank money printing then triggers forex shortages and currency collapse. (Colombo/Feb25/2021)

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  1. First,undeclared money is illegal according to the tax law, and this should have been tackled without hesitation, much of this been through fraud , bribery and corruption. Funds coming into the country, under the pretext of NGO’s have not been monitored properly, Guess? Next, taxes should be equitable,in that those who should be taxed directly should not be victims in favour of a few who are given strange tax benefits and even awards. The change to tax levels, obviously is because the value of the rupee has been pummeled and seen a steep depreciation for no fault of the citizen, in the majority. Proven legitimate earnings shoukd not be targeted and been penalized, but encouraged to be invested in the right direction. It is very naked to the eye to see, ceremony after huge ceremonies taking place frequently, in a country that is carrying huge debts on the shoulders of the hapless citizens.

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