State Minister of Finance Eran Wickramaratne hinted at a Budget seminar on Wednesday, that an International Sovereign Bond had been successfully placed.
Speaking at the BDO Budget seminar at the CA Auditorium in Colombo, he said that he was happy to see fiscal prudence. His comments focused on the improvement in the debt profile of the nation. He was happy to see the foreign reserve position of the government was to improve. “This was the first fully UNP Budget,” he added.
BDO - Binder Dijker Otte, an international network of tax-related firms organised the event which featured BDO’s tax implication analysis of the budget followed by a panel discussion.
The panel included State Minister of Finance Eran Wickramaratne and Tax Commissioner D.R.S. Hapuarachchi, while the industry was represented by Rajendra Theagarajah, Chairman, Ceylon Chamber of Commerce and Hasitha Premaratne of Brandix.
Tax Services of BDO Partner Sarah Afker opened the event by hailing the Budget for its efforts at addressing gender issues. The Budget has many incentives for firms to take better care of their female employees. The Budget has incentives for firms that provide maternal leave for up to four months. She hoped that such measures would “reduce unwanted questions” at hiring interviews for female applicants.
Sarah Afker also highlighted the level playing field between the formal and informal sector that the Budget hoped to create for the tourism sector. She also noted many benefits to export-related companies that prevent taxes from impacting working capital. She mentioned that the Budget brought clarity to some tax concerns for migrant workers.
Theagarajah opened his remarks by praising the Budget for its lack of shocks. He was expecting a more populist spending program. Theagarajah fielded many questions on the Budget’s implications on Banks.
He was happy that there was no change of tax applicable to Banks. With regard to Enterprise Sri Lanka, he was wary of banking participation in the project as previous dues are yet to be paid. Overall, he felt that with IFRS 19 and Basel requirements, there was little room to tax the sector.
The senior citizen’s interest rate rebate is yet to be received by the banking sector for multiple periods. Afker commented that there was an abuse of the system with people placing deposits in other people’s names. Premaratne mentioned that it might be more impactful for the government to clear its past dues, before proceeding on new projects.
The industry representatives were happy to witness tariff reduction taking place. They welcomed improvements to the Customs Act. They championed the free trade agreements process. They were deeply appreciative of the government’s stance in this regard.
There were a few issues requiring clarity. Both Theagarajah and Dinusha Rajapakshe, mentioned that government bonds were to become scripless.
How this would be implemented to permit the common man to invest is to be seen. Dinusha Rajapakshe noted that tax complexity is a huge concern for small enterprise. She asserted that better communication was necessary for small entrepreneurs to maximize their benefits from the budget.
D.R.S. Hapuarachchi noted that the newly brought in RAMIS system was initially incompatible with the new Inland Revenue Act. The system is being amended to make it compatible. He suggested that any weakness in tax collection has multiple sources of failure.
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