COLOMBO: Finance Minister Ravi Karunanayake said that the government has decided to introduce a new tax scheme to encourage small, medium and large scale investors, both local and international. The purpose of the new system is to give priority to genuine investors to ensure economic growth in the country, he says. “The intention of the proposal was to spur investment into the country looking at US$ 5-6 billion per year, to give a much clearer simpler administrative Inland Revenue Department and tax incentive,” the Minister said addressing a media briefing Sunday. Tax concessions depend on amount of money invested, number of jobs created and area of the investment. The company income tax has been simplified at three levels under the proposed Inland Revenue Bill. The new tax rates will be 14-20% while alcohol and tobacco producers will be charged 40% tax. Production of carbonic fertilizer and waste management has been freed from tax. Personal income will be free of taxes up to Rs. 500,000 per annum and pay taxes will be free up to an income of Rs. 700,000 per year.
Medium and large scale investments in port development sector will be especially entitled for the tax holidays and concessions, the Finance Minister revealed. He said that several sectors will be made free from taxes to encourage individual small investors. Commercial activity centers, IT, gems and jewellery exports, house construction, solid waste management, organic fertilizer production, poultry, and dairy have been treated as tax free ventures and the benefits come to the actual individual investors. Finance Minister Karunanayake said that through the new tax system the government expects to create million jobs, enhance revenue by US$ 5-6 billion annually and resolve problems in the investments. The Minister said he is confident that the new tax system will strengthen the ability to obtain investment instead of loans and reduce government borrowing. He pointed out that the current government has gradually reduced the borrowing and in 2016 borrowing has been reduced by a record 4.6 percent. While the limit of borrowing in 2016 was Rs. 1,699 billion, the government has borrowed only Rs. 1,319 billion, Rs. 380 billion less than the limit, the Minister noted.
