Sri Lanka’s Dialog Telecom report profit gain amid tax uncertainty
COLOMBO (EconomyNext) – Sri Lanka’s Dialog Axiata said profits in the December 2014 quarter rose 31 percent from a year earlier to 1.47 billion rupees without making provision for retrospective taxes announced in a revised budget in January.
The group reported earnings of 18 cents per share for the quarter. In the year to December 2014 the group reported earnings of 76 cents per share on total profits of 5.8 billion rupees, up from 5.1 billion rupees a year earlier.
A revision to the budget on January 29 announced a 29 percent ‘ill-gotten’ levy on taxable profits of companies that reported profits of over 2.0 billion rupees a year.
Satellite broadcasters were also hit with taxes.
Dialog said it had not made provisions for any of the new taxes as legislation had not yet been enacted for the proposals.
"…[P]ending legislation and clarity as at the time of announcement, the consolidated financial results
as reported excludes any and all impacts from the Interim Budget," the firm told shareholders.
Dialog said the group contributed 11.1 billion rupees to the state as taxes, fees and levies to the government including income tax at 2 percent of revenue.
Another 13.3 billion rupees including a telecom levy of 10.5 billion in consumption taxes were collected on behalf the state, which made the total contributions to the state 2.4 billion rupees, the firm said.
Telecom firms were also asked to absorb the main consumption tax which already goes to the state.
Rohan Samarajiva, a former telecom regulator and infrastructure specialist has said the regime should withdraw the proposal, which does not affect net revenues to the state, but harms the firms.