Dr. Kanag Isvaran to speak on Trust Law in Sri Lanka
Law & Tax issues pertaining to Trusts in Sri Lanka are shrouded with mystique. Whilst the legal framework pertaining to Trusts is contained in the Trusts Ordinance, one of the oldest statutes in the country, the income tax rules applicable to Trusts witnessed a complete overhaul with the enactment of the new Inland Revenue Act recently.
This latest development has the potential to increase the use of Trusts by individuals for personal matters and by companies in commercial sphere.
The introduction of certainty with regard to tax rules applicable to Trusts is a salient feature welcome by the tax professionals. Not only income tax, in Sri Lanka trusts are also the indirect tax net consisting of VAT, NBT, Stamp Duty etc. Trusts will also attract new rules pertaining to capital gains tax too.
KPMG Academy has organized a seminar where Dr. K. Kanag Isvaran will be delivering the keynote speech at the seminar titled “Use of Trust as a vehicle for tax planning” on February 13th from 2 to 5 p.m. at Movenpick Colombo. The keynote address will be followed by presentations from Suresh R I Perera, Principal – Tax and Regulatory and Rifka Ziyard, Associate Director Tax and Regulatory.
To reserve your seat contact KPMG Sri Lanka Academy on 0763596176 or 0115426214 or by email: lk-academy@kpmg.com
Trusts could be used effectively in personal and family tax planning exercises, though rarely used in Sri Lanka. Parents could use trusts to pass on their assets to children in the future and in the interim, source the funds for the expenses of the children including education & maintenance.
A Trust could be used for many purposes both Personal & Commercial. The creation of trust for Personal use would include where a parent wish to manage his / her property during the life time or pass on the assets to his / her children after the demise. The former type is known as an “Inter - Vivos Trust”.
Assets subject to Trust many forms including land, building, vehicles, shares in a company, other financial instruments etc Assets subject to a trust could even be a stream of income receivable such as rent due from tenants. A Trust is an important vehicle that could be used to arrange funds for the upkeep and education of children by a parent or make arrangements by a husband to look after the interests of his wife & children in case of unfavourable circumstances on a future date.
A trust can be utilized to in place of an annuity. An annuity is created to ensure a steady stream of income for the future. Offshore Trusts could be used for financial planning, for asset protection and also provides could be created to preserve confidentiality.
In the Sri Lankan context Trusts are mostly used in the commercial arena in relation to Employee Share Ownership Trusts (ESOT). Trusts are also used in Sri Lanka in relation to Pension and Securitizations as well.
Trusts could also be utilized by philanthropists to arrange funds and assistance to the needy. The tax statutes look at Trusts which are charitable institutions in a favourable manner with tax benefits.