Tax concessions given by the current government have given local entrepreneurs a chance to resurrect, says the Colombo Business Association (CBA).
At a press conference held Sunday at Grand Oriental hotel about the tax benefit to both businessmen and customers, the Secretary General of the Colombo Business Association, Chaminda Vidanagamage thanked the government for releasing the tax burden faced by the people and the entrepreneurs at the very first Cabinet meeting.
“Foreign businessmen in this country have had the darkest period in their lives for the past four and a half years. Everything we earn as businessmen, we gave to the government,” he said.
He also said, “The reduction of VAT from 15% to 8% will affect businessmen, entrepreneurs and consumers and give a big boost to the businessmen. Also, businessmen have been freed from VAT up to 25 million rupees turnover per month from the existing one million rupees. We should appreciate that”.
Similarly, the other concessions such as removal of Capital Gains Tax, Nation Building Tax on domestic production, Bank Debit Tax, Pay as You Earn Tax (PAYE) directly or indirectly benefit the businesses, he noted and said, “We hope that these tax exemptions will spur a new growth in the country’s business sector”.
Vice President of the CBA, Janagarathnan Thiyagaraja explaining the benefits of the government’s tax reductions for the tourism industry, which has suffered a serious downfall after the Easter Sunday attacks, said the elimination of PAYE tax is especially beneficial to the industry since most of the employees in the travel industry are PAYE tax payers.
He explained that the reduction of VAT from 15% to 8% will not affect the industry as much due to the moratorium issued after the April 21 attacks for VAT at 7.5% while the Tax-free threshold for VAT which has been raised to Rs. 25 million from Rs. 1 million turnover per month will encourage the small-scale travel companies to get actively involved in bringing foreign revenues.
However, the CBA Vice President cautioned that although beneficial in one hand, the Finance Ministry and the Tourism Ministry should enforce some regulations to prevent unqualified people entering into the travel industry due to the relaxed Tax-free threshold and monitor the new businesses in the leisure industry.
CBA Vice President said the tax concessions will raise the budget deficit to 8.5% of GDP from the 5.3% in 2018 creating a deficit of about Rs. 1,275 billion and it can be narrowed only with the contribution from the businessmen.
“Whatever, the contribution the government expects from us we are ready to do that,” Mr. Janagarathnan said adding that in return they expect the government to clear some of the bottlenecks in the business sector.
“We hope this is a very good start with the new government and we will contribute 100 per cent in whatever way possible.”