Budget in consultation with private sector - less criticism from
business community - Tax Advisor
by Gamini Warushamana
Senior Tax Advisor to the Ministry of Finance and former Director
General of the Inland Revenue Department R. P. L. Weerasinghe said that
as the budget has been prepared in consultation with the private sector
this year there is less criticism from the business community.
Addressing a seminar organised by the Institute of Chartered
Accountants of Sri Lanka (ICASL) Weerasinghe said "this is your budget.
Even though the Treasury prepared the budget all these proposals are
yours and we held 25 pre-budget meetings to seek the views of the
business community, tax experts and other concerned groups. Therefore
these policies are yours.
The budget is under extensive analysis and many concerned groups have
organised post budget seminars and discussions. Weerasinghe said that
within two days this is the fourth seminar addressed by him. The ICASL
seminar discussed the taxation aspects of the budget.
Weerasinghe explained the tax policies behind the budget. The
objectives are to protect the motherland, develop infrastructure,
develop and protect local industries and boost foreign earnings. For all
these government needs money and taxation is for that.
Our tax revenue has taken a U turn and from 2003 it is on the
increase. In 2003 the tax revenue as a percentage of the GDP was at
13.2% and this year it is at 15%. Next year we target 6% and our
intention is to increase tax revenue as a percentage of the GDP by 1%
annually.
To achieve the target we adopted new tax administrative measures.
There was a big gap between policy makers, tax administration and the
taxpayers. A dialogue was started in tax clusters and we discussed the
policy changes. Taxpayers and tax administrators were not friendly. New
regulations were brought to recognise and protect taxpayers. As a result
we exceeded our tax revenue target, he said.
To develop agriculture tax has been kept out completely. Regional
development and reducing the asymmetry of the Western Province and the
rest of the country was considered in last year's budget and tax relief
was given.
Focusing on the Eastern province development tax concessions were
given this year for investment, import of plant and machinery and
interest income of the loans given in these areas. A two-year tax
holiday has been given for relocation of industries.
Weerasinghe also said that the tax exemption proposed in the budget
should not be misinterpreted. There is no need of Treasury approval. The
Treasury only collects the data and monitors the tax holidays on
investments.
Any existing tax holiday cannot be extended. Therefore the existing
tax holidays have not been touched. The normal BOI tax holiday has been
limited to three years. Two criteria have been adopted and the tax
holiday starts from the day commercial operations begin. Tax holidays
for the construction period have also been provided. Our intention is to
cut down tax rates, Weerasinghe said.
gamini@sundayobserver.lk
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