Finmin addresses COYLE on ‘Sri Lanka towards a more simplified tax system’
The Chamber of Young Lankan Entrepreneurs (COYLE) invited Finance Minister Ravi Karunanayake to address a vital topic ‘Sri Lanka towards a simplified tax system’ and to draw attention to particular areas of concern where his advocacy could be beneficial.
In his opening statement at the general meeting held at Hilton Colombo Residencies, COYLE Chairman Kasun Rajapaksa thanked the minister for his willingness to meet the chamber and to address the needs of the business sector. He also congratulated the minister about the statement issued by World Bank Vice President South Asian Region Annette Dixon that Sri Lanka has been rapidly achieving its development goals, which were set at the time the loans were granted and that the financial disciplines practiced by the incumbent government are the reasons for such achievements.
Karunanayake elaborated on the inherited financial debt and backed it with statistical data and comparisons with similar countries while emphasizing the need to put Sri Lanka on the map despite the present fiscal challenges and stated that results would be visible in 16 months’ time. The need of the hour he stated was higher tax compliance, tax restructuring, financial discipline and prudent spending in order to spur growth in the economy.
He assured the members that the government was taking steps to identify and help eliminate regulatory duplication, lessen compliance burdens and make it easier for businesses to interact with the government thus alleviating unnecessary pressure on businesses. The process will focus on four sectors including the Inland Revenue Department, Customs, Excise and Levies and the reform initiatives will seek to broaden the taxable base, reduce tax rates and promote tax equity and economic growth in the economy, within the context of the economic reform programme. One classic case in point was the Customs ‘Single Window’ launch to ease import documentation and prevent corrupt practices.
At the Q&A session, some of the issues brought up by the members representing various sectors including vehicle imports, manufacturing, financial services and IT industry, focused on simplified value-added tax (VAT) system, the Economic and Technology Cooperation Agreement (ETCA) with India ramifications, free trade agreement (FTA) implications, electronic payment system through PAYPAL for foreign remittances, upcoming revision of capital gains taxation, limits for foreign investment by Sri Lankans, Net Metering system and its hiccups and tax on imports.
In reply, the minister addressed each query and assured the COYLE of the ministry’s assistance wherever necessary. He stated that evidence-based information is vital to follow up with final recommendations of the special advisors. The ministry would conduct a cost-benefit analysis to assess the impact on the economy for any changes to be implemented and help reduce the cumulative regulatory burden on businesses. This process should not be rushed. Sri Lankans need an economy that is competitive and responsive to an ever-changing global marketplace.
“At a time when taxation and costs of doing business in Sri Lanka are rising, the government must consider the impact these changes will have on competitiveness and effects on businesses and that’s why it’s time to identify barriers to growth and recommend policies that will give businesses room to grow. We appreciate the sincere efforts of the minister to address these issues and making burden reduction a priority. We wish him all success in all his endeavours,” stated State Affairs Sub Committee Chairman Lalith Kahatapitya, who delivered the vote of thanks.