Ad hoc tax on glove manufacture may divert US$ 100 mn from SL | Daily News

Ad hoc tax on glove manufacture may divert US$ 100 mn from SL

One of the leading industrial glove manufacturers in the world, based in Katunayake and Koggala has second thoughts about investing a further US$ 100 million and generating an additional 4,000 jobs in the country.

This is due to the recent imposition of ad hoc taxes such as excise levy on non-portable spirits (methanol) which is one the prime raw materials in industrial glove manufacturing.

“This move will certainly impede our expansion developments especially in the recently opened factory in the South as this is a clear violation of the BOI initial agreement,” an official from the company said.

“We entered Sri Lanka in 1992 as an exporter and registered under Board of Investment of Sri Lanka Law No 4 of 1978. Since our commencement in Katunayake, we have expanded to other industrial export processing zones in Sri Lanka, providing direct employment to over 6,000 and over 50,000 indirect dependents.”

“To date, the company has invested more than US$ 200 million and we have planned to invest in many more plants in the South and they were done on the assumption that the government will offer all support to help the investor.”

“This was clearly mentioned in the very first agreement we made in 1992 which says that all imports of plant, equipment, machinery and construction material, raw material and other material to be used for and by the enterprise for the sole purpose of the said business within the said zone shall not be liable for ANY import duty and shall not be subjected to ANY Customs or ANY other like restrictions.”

“This excise levy of Rs. 25 for methanol was originally introduced in the 2016 budget proposal. After continuous requests made by us, the levy was withheld by the Finance Ministry. But with effect from August 1, 2017, this levy was imposed again and subsequently was removed on August 22. However, once again this is imposed with an amended amount with effect from November 10, 2017. Recently the amount was once again amended on December 19, 2017.”

“By the imposition of this ad hoc tax we have been treated differently as a manufacturer as all other BOI companies are allowed to import all raw materials tax free for export purposes. We, like all manufacturers, have to compete in the world market and such levies of this nature will force us not to invest in Sri Lanka and look at another regional country.”

“We must also thank and highly appreciate Minster Malik Samarawickrama and Board of Investment Directors for the cooperation extended so far trying to remove this levy. We sincerely hope that in the coming days that they will be able to convince the Minister of Finance to remove such levies on BOI manufacturing companies.” 



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