CIMA seminar unravels the Finance Act
The CIMA seminar on ‘Recent Developments in Taxation’ was held recently at the CIMA Auditorium.
Suresh Perera, LLB, Attorney at Law, FCMA (UK), CGMA delivered his presentation focusing on the Finance Bill, VAT and NBT Amendments and recently issued gazettes and circulars under the new Inland Revenue Act.
The presentation was focused on sector-specific taxes in telecom industry, automobile industry, banking and finance etc
In analyzing the automobile sector taxes, Perera mentioned that at present any luxury, semiluxury, semi luxury dual purpose vehicles is subject to the levy which is paid in a span of seven diminishing installments over a period of seven years.
He further added “A new levy termed the ‘Luxury tax’ will be applicable with effect from the date of commencement of the Finance Act. This would be a one-off tax”. If the date of importation of the vehicle is after the commencement of the Act, the payment of the luxury tax should be made to the Director General of Customs at the point of importation together with other import duties.
On the other hand, if the importation had occurred prior to the date of commencement of the Act, but registration of such vehicle is on or after the date of commencement of the Finance Act, the Luxury Tax is payable to the Commissioner General of the Department of Motor Traffic at the point of the issuance of the registration certificate.
Perera pointed out in his presentation that Part IX of the Finance bill issued on 10th August 2018 contains the legal provisions pertaining to the Annual Company Registration Levy. Accordingly the Annual Company Registration Levy will be imposed only from the date of commencement of the Finance Act. An offshore company and a company limited by guarantee would not be subject to the levy.
Companies liable for the levy should pay it to the Registrar of Companies at the time of filing its annual returns. Any company incorporated under the Companies Act No. 7 of 2007 during 2018 will not be liable for the payment for the year commencing from January 1st 2018.
He also pointed out the rates stipulated in the second schedule of the Bill reflects a deviation from the rates proposed in the budget speech of 2016.
While the budget speech proposed a levy of Rs. 60,000 per annum for a Private Limited Company, the Bill has reduced the rate to Rs. 30,000. However, for Listed Public Companies, the budget proposed a levy of Rs. 500,000 whereas the Bill imposes a levy of Rs. 1,500,000. Any other company will be subject to a levy of Rs. 250,000 whilst the budget proposed a levy of only Rs. 100,000.