Govt. to include investment calculations of land in capital allowances
The government plans to include investment calculations of land in capital allowances in an attempt to boost investments to Sri Lanka, as the capital allowance scheme remains unpopular among the investors due to the unawareness of the same.
Addressing an event at the Institute of Policy Studies in Colombo this week, National Policies and Economic Affairs State Minister Dr. Harsha de Silva said that many investors haven’t grasped the capital allowance scheme, which was introduced in the new Inland Revenue Act, replacing the tax holidays.
He blamed the weak communication strategy of the government for failing to raise awareness of the incentives provided under the capital allowance scheme.
He revealed that the land will also become part of calculation of investments in capital allowances shortly.
He insisted that the capital allowance is equivalent to seven to eight years of tax holidays.
“What a lot of people don’t realise is the kind of incentives we have given for investments, the capital allowances. If you invest US $ 1 million in Jaffna for instance, you don’t have to pay any taxes until you make US $ 3 million in profits.
Outside the Northern Province, you don’t have to pay taxes until you make US $ 2 million of profits. In that sense, you are looking at seven to eight years of tax holidays,” he elaborated.
Commenting on some of the government’s tax policies introduced through the Inland Revenue Act, the state minister emphasised that certain tax policies are not conducive.
“I am a little bit frustrated too on some of the tax policies. I have already conveyed this to the president and prime minister.
We need more conducive tax policies. For instance, I don’t see any reason why we should tax NRFC accounts. These kinds of taxes should be removed immediately. I am sure it will be removed,” he added. (NF)