“It’s better to have single tax system”: Consultant
Wednesday, 4 June 2014 00:00
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Key Management hosts seminar on Budget 2014 tax proposals
Sri Lanka should have a single tax system to avoid publication of business entities, Senior Partner, Key Management Consultancy Services, Approved Accountants, H.I.P. Imaduwa said.
Revenue authorities tax businessmen twice by way of Economic Service Charge and Withholding Tax, which come under income taxes, Imaduwa said at a forum on ‘Budget Highlights – 2014’. The event was organised by Key Management Consultancy Services.
He said the Government was only keen on increasing tax revenue without considering expenditure.
But the country’s tax laws are exceptionally good due to the process of law. The tax system in the country should be simple, stable, and acceptable and certain for any country to enhance revenue collection, he said.
This is because certain areas enjoy tax exemptions including agriculture, export and other specific sectors in the country.
“Government revenue as a percentage of GDP declined in 2013 compared to the previous year. However, it increased in nominal terms due to the favourable performance in tax revenue specifically from income taxed, Value Added Tax (VAT) on both domestic activities and imports, the Special Commodity Levy (SCL) and excise tax on motor vehicles reflecting a pickup in economic activity supported by the gradual recovery of the global economy. Total expenditure and net lending as a percentage of GDP declined in 2013 reflecting measures taken by the Government to rationalise recurrent expenditure, while maintaining public investment to continue strategically important infrastructure development projects.” (Extract from Weekly Economic Indicators – Statistics Department Central Bank of Sri Lanka)
But the most important concern was the Government has not considered the expenditure incurred on tax collection. To increase Government revenue it should include the public sector under the tax net, which is one of the methods to increase tax revenue, Imaduwa said.
Tax evasions are prevalent in the country and most tax evaders are good philanthropists. Most BOI companies enjoy long tax holidays, which cause problems in revenue collection.
Key Management Consultancy Services (KMCS) conducted the seminar for business customers, including traders, importers, exporters, manufacturers and distributors, with the objective of discussing the tax proposals in the 2014 Budget and the impact on their businesses.
The invitees were given an opportunity to interact with the panel to discuss and clarify specifics on the 2014 Budget tax proposals relating to different businesses. The panel encouraged businessmen to take advantages of the benefits offered by the 2014 tax proposals and further grow their specific business segments.
Imaduwa said: “The business customers are an important segment for us and we will do our best to keep adding value to their businesses in whatever ways possible. You can look forward to more of these forums being organised for business customers on varied topics of interest in the future.”
