BOI tax holidays to remain unchanged
Deputy Treasury Secretary, S.R. Attygalle announced that BOI tax holidays will not be removed despite the introduction of the new Inland Revenue Act.
The Deputy Treasury Secretary has made these observations at a Ceylon Chamber of Commerce (CCC) business forum held recently.
“It has been agreed between the government and the BOI that they will stay,” he has told the forum.
It must be noted that BOI tax holidays have been given extensions through several provisions and have negatively impacted Sri Lanka’s tax collections.
According to the State Minister of Finance, Eran Wickramaratne the new act will reduce ministerial discretion regarding tax concessions and matters like Strategic Development where ministerial discretion was all-encompassing, will be deferred.
However, he added that assurances regarding the Hambantota port project will remain.
Double or triple depreciation will replace tax holidays, with new investments granted up to 150% depreciation on capital allowances and up to 200%depreciation in the Northern Province.
In the case of IT firms, should they forgo the capital allowances claim, they can instead claim a 35% reduction on their actual salary bill.
Meanwhile, also addressing the same forum State Minister for Finance Eran Wickramaratne has said the new law will give certainty but reduce the discretion given to the minister to give concessions.
He has been quoted in the media as saying that in the case of the Strategic Development, which will be suspended, wide discretion was given to the minister to decide on concessions.
According to Wickramaratne, arrangements will be made to ensure that undertakings given in the case of the Hambantota port project is kept.
Hence, tax holidays will be replaced by double or triple depreciation is provided.
New investments are to be allowed depreciation of up to 150 percent (capital allowances). In the case of the Northern Province, capital allowance of up to 200 percent will be given.
Retention of BOI tax holidays will maintain foreign investor confidence and continue to attract foreign investments into the country.
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