‘Tax relief to public remains only with current government’ | Daily News


‘Tax relief to public remains only with current government’

The tax relief provided to the public would only remain if the current government continued, tax experts said at a recent forum.

Professor Lakshman Watawala (Pictured) and Tax Principal KPMG Suresh Ivan Perera said this at an event exploring the recent tax amendments Charted Management Accountants of Sri Lanka at the Taj Samudra last week.

Watawala said, “I am sure that after the elections this may change but we do not know how it will be. For the moment all are enjoying the benefit. What you have enjoyed, they might change.”

Watawala added, “If you look at the private sector they are looking at areas they can invest that they can get a benefit. If you look at the garment industry from 1991 to 1993 it was developed really due to the tax incentives we were giving at the time. We did not get them to do the factories in Colombo but for them to go to rural areas. They even gave companies an incentive for relocating their factories to outstation.”

The directives were published by the commissioner general as instructed by the Ministry of Finance. A notice was issued directing previous notices as null and void for the year 2020. Perera said, “The content of this is what should be legislated with retrospective effect.”

He added, “We have seen this, we saw this in the company registration levy in 2016. There was a budget proposal to introduce company registration levy and thereafter the registrar of companies published a press notice and started collecting. Some companies paid and some did not pay. Some companies said there was no law to collect the levy. In the end, it concluded by it being legislated. It got legislated in 2019 but it was legislated for a period of a year from 1 January to 31 December 2016 and there was a payment deadline in 2019.”

“Sometimes what is coming in the proposal is not what is getting legislated so we have to be mindful of that also.” The IRD is following the lead of the current government and not opening new tax files in line with the information publicly circulated.

Perera said, “More than 30 notices have been issued. These are not law.”

Perera added, “We have a constitution and the public finance of the country is governed by chapter 17 and article 148 and article 152 which is relevant. Article 152 goes on to say that taxes could be augmented, repealed, introduced, or reduced only by a minister providing a bill in the parliament and there is a procedure given there.”

“In Sri Lanka though that article has been there we see a budget that is in place and there is a press notice and thereafter the implementation takes place and there comes the statutory representation with retrospective effect. ”

Watawala said, “If you want to develop the economy you can’t give something today and expect a difference tomorrow. The people think it is something that it is magic.

Economic development is a part of tax reforms that are to take place.”


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