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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2866

Sri Lankan exporters urged for a simplifies tax system

By Quintus Perera

Colombo, 06 November, ( The National Chamber of Exporters (NCE) lamented that the present tax system specially the Value Added Taxation (VAT) has started ‘killing’ enterprises and a number of them have now been put up shutters.

This was revealed at the Press Conference held at Sri Lanka Foundation Institute at a pre-budget discussion organized by the NCE, last week.

D K Rajapakse, President, NCE said that at present the exporters are forced pay 10 different taxes and conforming to these tax formalities has become really cumbersome. He said that it is not a matter of paying these taxes but their main grouse is adhearing to these formalities cause immense paper work and lot of their time is involved in attending to them.

Now the exporters have to pay taxes like VAT, Withholding Tax (WHT), ESC, Income Tax, Social Responsibility Levy, Stamp Duty, Deemed Dividend Tax, Debit Tax, TT and PAYE Tax. But earlier it was only three type of taxes: Income Tax, GST and PAYE Tax.

Rajapakse urged the government to come up with simplified taxation system that would lessen their paper work and time.

NCE indicated that a major commotion is created among the business circles due to the irregular way of dealing VAT and due to the inordinate delays some enterprises had to be closed down. They said that the inordinate delay in refunding VAT is understood because the government is also facing a liquidity problem.

Rajapakse said that the easiest way out for this VAT refund problem would be to issue a Certificate by the Inland Revenue Department so that it could be tendered as a security to obtain loans.

The other major matter they discussed is the ad-hoc salary increases proposed by the government for the private sector. Added to the major implications caused by the present taxation system, the ad-hoc salary increases would further aggravate the situation.

Graetian Gunawardhana, Past President, NCE said that he is compelled to close down one of his factories due to the hullabaloo caused by the present situation and around 800 employees would lose their jobs.

He said that most of the industries and services are covered by the Wages Boards and these Wages Boards too impose various increases where necessary and while adhering to them, if they were to adhere to ad-hoc salary increase proposals, many of them would have to ‘close shop’ causing an economic disaster in the country.

Gunawardhana said that at some occasions VAT refunds were stuck at IRD amounting to Rs 70 to 100 million on one import consignment alone, imported for the purposes of value-addition and re-export. When these refunds are delayed they encounter liquidity problems to find cash for working capital requirements.

NCE suggested that to formulate a minimum wage structure and make additional payments on performances. With the present holiday structure they pointed out that a consistent productivity rate could not be maintained and the best solution would be to pay on performance which would boost up productivity and workers too could increase their income.

High productivity is essential to stay in exports in the present global scenario. It was pointed out that in this manner an average worker could earn an additional payment in the range of Rs 15,000.

A K Ratnarajah, President Ceylon National Chamber of Industries (CNCI) said that limiting VAT input credit claim to only 85 percent as against the previous 100 percent would threaten the existence of new companies as earlier enterprises could claim 100 percent relief.

He pointed out that corporate tax rate has gone up to 70 percent due to a multitude of taxes introduced by the government.

The forum also discussed the problems caused by the present stamp duty structure. Further they discussed the implications caused by conforming to EPF and ETF requirements. It was suggested that both EPF and ETF remittances are amalgamated and added to one single Return by entrepreneurs and the separation to the two different funds to be done at Treasury level.

Going by the request by the Government to come up with alternate revenue proposals, the Forum decided to accede to the request.

Patrick Amarasinghe, the Founder President, NCE also participated in the discussion.

- Asian Tribune -

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