The tax concession package introduced by the new government came into effect from yesterday (1).Accordingly, the tax restructuring on indirect taxes will come into effect from December 1, while concessions given on direct taxes will be implemented from January 2020, Information and Communication Technology, Higher Education, Technology and Innovation Minister Bandula Gunawardena said. The Finance Ministry has issued the relevant gazette notifications relevant to these concessions, Minister Gunawardena also said.
Speaking at a media briefing held at the Department of Government Information Auditorium yesterday evening, Minister Gunawardena said the government is planning to introduce a tax exemption package for local entrepreneurs in near future. Gunawardena expressed his confidence that the economic growth rate will increase up to 6% in 2020 due to these new tax concessions.
Minister Gunawardena furthered that, “Many groups had expressed scepticism regarding the tax cuts this government introduced. Many alleged that these tax cuts will only be there until the coming general election. However we cannot call this move as an incentive for the general election. It was done to give a breathing space for people who had to bear heavy taxes because of the previous government.”
“The previous government imposed taxes in a manner in which the people had to undergo many difficulties. Even when the war was going on, the business community in Pettah market has never demonstrated against economic difficulties. However, the changes the Yahapalana government did to VAT was so serious that, for the first time in Sri Lankan history, the business community in Pettah closed down their shops to express their dissatisfaction over it.” Gunawardena pointed out.Minister Bandula Gunawardena also said that the economic policies of the previous Yahapalana government was so feeble that many businessmen have sought to either sell off their businesses of rent or lease their buildings.
“Thus Prime Minister Mahinda Rajapaksa together with the Governor of the Central Bank and other heads in the banking sector sat for an official meeting to discuss the difficult situation that our small scale and medium scale entrepreneurs are going through. At this discussion, CBSL Governor said that they will come up with a plan to rejuvenate these private businesses and to aiding them without making any ripple effect on the banking sector. We are trying to make it easier for our people who suffocated under drastic tax implementations for the last four and half years. We did see that the government revenue had a sharp increase during the previous government, but that was at the cost of immense tax pressure on the innocent people. During Mahinda Rajapaksa’s earlier government, the government revenue earned from taxes was 1 trillion and the previous government made 2 trillion, which means Yahapalana government increased taxes from a 100%. This is why President Gotabaya Rajapaksa took measures to release people from this pressure.”
Gunawardena also said the government expects to amend the Inland Revenue Act which was brought by the previous government. “Presently, income tax payers will have to seek expert knowledge to fill their income tax forms. The government in near future expects to introduce a simple form for those who would have to pay income taxes,” he also said.
Gunawardena also said, “We will be able to increase the government revenue by decreasing its unnecessary expenses. For example, President Gotabaya Rajapaksa recently visited India with a small group. They came back with great financial benefits. They have spent less and earned more. Similarly when we get rid of all these money wasting projects, our government income will increase.” Gunawardena in reply to a question on tax cuts said foreign workers will soon be exempt from taxes or be given concessionary tax cuts as well.