The government would not change the current tax structure for the next five years, says Commissioner General Inland Revenue, Nadun Guruge.
He said that Dr. P. B. Jayasundara, Secretary to the President, Gotabaya Rajapaksa, met him on Tuesday and instructed that the current tax concessions that were offered should not be changed.
“This is first done to install investor confidence in the country and Sri Lanka was famous for adopting ad hoc tax changes. Due to these regular changes both foreign and local investors have second thoughts in investing in Sri Lanka and it even had a negative impact on exports,” he said.
“Several openings express that the current tax concessions that were offered would be reversed after the forthcoming elections and now I can say that these tax concessions are there to stay for the next five years. For an example tax on cars were changed several times and now the government assures that there would not be such changes in the next five years. By maintaining a clear and long term tax structure, we expect more investments in the future,” he also said.
Asked to comment on the reduction of PAYE tax for employees, he said that the revenue generated from it in 2019 was around Rs. 48 billion with over 85% of them from the private sector.
“I will meet the government banking sector and request them to explore the possibility of requesting the employees who benefit from this scheme to reinvent their saving in banks rather than using them for consumption and other leisure actives,” he added.
He also noted that there are still gray areas in widening the tax net where some professionals like doctors, lawyers, teachers and whole sellers in Pettah do not pay taxes. “This is because they do not provide a bill for their service and we have no way of tracing them. We are still looking at proving a solution to net them in and will talk with government in this regard”.
He also said that Sri Lanka tax structure is still one of the most economical in the world. “We are not taxing the people as many other countries do.”
Commenting on the double taxations, he said Sri Lanka has this facility with 46 nations and soon they will increase this to 8 other countries. These include United Kingdom, Hungary, Czechoslovakia, Maldives, Austria and Cyprus.
“This too would help the country to woo more business opportunities,” he noted and said that they successfully negotiated with Turkey to implements the double tax agreements.
During the talks we also observed the wide potential which Sri Lanka has to export tea to Turkey as their citizens consume around 20 cups per day. “However there is a 145% duty on tea imports to Turkey and this is a major issue for local tea exports to Turkey”.