‘Lack of clarity marring Bill’

By Hiran H.Senewiratne

The New Inland Revenue Bill has been drafted by IMF experts and others who have not ‘even read’ the Tax Acts of Sri Lanka. Nor have they read the relevant case law and therefore I have no idea why some of the provisions were introduced into this Bill, a highly placed stock broker, who sought anonymity said.

"This Bill has no clarity and it does not mention how the government is going to levy taxes; for instance, what percentage for corporates and what percentage for individuals, this source attached to the Colombo Stock Brokers Association told The Island Financial Review.

He said that the Bill envisages higher taxes on unit trusts, that would be an integral part of the entire capital market. "Further, when the unit trust market is affected it would discourage local investors from investing in fixed and equity markets, he said

He also said that the application of the new tax on unit trusts is confused and complicated. This provision should be re drafted in order to iron out issues.

"Inland Revenue Department officials could have codified the Act and the amendments into one Act which could also include the budget proposals. When the draft was perused by some of the IRD union members, they had asked why no reference has been made to the incentive scheme, the source said.

"If a new Bill is to be introduced, it should be discussed with all stakeholders, ie, the tax paying public, the IRD officials and other organizations before drafting, which did not happen, the source explained.

"Unfortunately, the tax paying public had been ignored. No one would download over 200 pages from the web to study the draft, he said.

"Further the new Bill is being introduced just after the presentation of the 2017 budget proposals. Therefore, all amendments stated in parliament and passed should be included in the Bill. If not, it would be fodder for the Opposition and the public to challenge the Act in a Court of Law.

"The fiasco that occurred after the 2016 budget will be repeated in the 2017 budget. he said.

"Local investors will move out of all debt and equity markets in the future due to this uncertainty and inconsistency in tax system, the source added.

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