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The National Chamber of Commerce of Sri Lanka (NCCSL) said it viewed the budget proposals for 2012 to be a development budget and a continuation of the simplified tax framework that was introduced during the 2011 budget. "However the chamber is concerned of how and when the budget would be implemented next year," the chamber said.
The chamber said: "This year’s Budget focuses on domestic industrial development, export promotion and import replacement as well as providing tax incentives to selected thrust areas including tourism, agriculture, animal husbandry, etc. In addition, the special incentives given to .SME’s are noteworthy whilst giving a boost to improve skills development, branding, R&D and new product development. National Chamber welcomes the depreciation of Sri Lankan Rupee by 3% as requested by the exporting community to stay competitive in the global markets. Chamber also recognizes the importance of continuing with the development of the infrastructure and incentives granted to develop human capital in the country. Further, incentives have been granted to promote Entrepot Trade and Off-shore trading to position Sri Lanka as a transshipment and trading hub.
"Reduction in the threshold from 90% to 75% for concessionary tax rate for exporting enterprises is commendable. The reduced income tax rate of 12% given to Tea Manufacturers who enters into Joint ventures with Branded tea exporters who add value will create more Sri Lankan brands in the international markets. Increase of Tea replanting subsidy will enhance the production and thereby increase exports. Recognition of Deemed exporters for exemption of NBT is fully appreciated.
"The National Chamber which has always promoted the development of SME’s welcomes the concessions granted to this sector. Reducing the investment threshold to Rs. 25 million with a 4 year tax holiday will encourage new SMEs thereby promoting rural economic development. The Chamber is pleased to note the allowing of pre-commencement expenses as a reduction of statutory income for SME’s. Setting up of SME Bank Units by State banks in each district will alleviate the long standing issue of access to funding by the SME’s. The 5 year tax holiday extended to Sri Lankan expatriates will promote entrepreneurship, investment and savings throughout the country.
"Recognition of tourism as a key revenue earner and providing further tax holidays and incentives will help achieve the targeted development. To cater to up-market tourists, the reduction of import duty by 50% motor coaches and tyres etc will enhance the quality of services offered.
To further strengthen the Apparel Industry, the key foreign exchange earner, a new act will be created to provide services in supply chain management, logistics etc., in the region to position as a trading hub.
To increase R&D activities by the private sector, for the first time a triple deduction is offered to research conducted with State institutions and we believe this is needed to stay competitive in the global market. Further, reduction of income tax for R&D companies to 20% will encourage new entities to enter into this unchartered area.
"We are happy to note, that the unabsorbed VAT input as of 12/31/2010 could be claimed from any taxes effective 1/1/2012. In fact, similar reduction was given in 2011 against VAT liability. However, it was later restricted to 5% of the net VAT liability. We recognize the prominence given for Import Replacement in areas such as Cement, Steel, Pharmaceuticals, etc., as this will provide more opportunities for Sri Lankan companies to produce these items locally.
"National Chamber recognized 2012 budget proposals as steps towards achieving the targeted development of the country by giving a special boost to the SME’s. However, we note that the successful achievement of these expectations requires firm commitment from state officials and timely implementation of said proposals," the Chamber said.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=39577
The chamber said: "This year’s Budget focuses on domestic industrial development, export promotion and import replacement as well as providing tax incentives to selected thrust areas including tourism, agriculture, animal husbandry, etc. In addition, the special incentives given to .SME’s are noteworthy whilst giving a boost to improve skills development, branding, R&D and new product development. National Chamber welcomes the depreciation of Sri Lankan Rupee by 3% as requested by the exporting community to stay competitive in the global markets. Chamber also recognizes the importance of continuing with the development of the infrastructure and incentives granted to develop human capital in the country. Further, incentives have been granted to promote Entrepot Trade and Off-shore trading to position Sri Lanka as a transshipment and trading hub.
"Reduction in the threshold from 90% to 75% for concessionary tax rate for exporting enterprises is commendable. The reduced income tax rate of 12% given to Tea Manufacturers who enters into Joint ventures with Branded tea exporters who add value will create more Sri Lankan brands in the international markets. Increase of Tea replanting subsidy will enhance the production and thereby increase exports. Recognition of Deemed exporters for exemption of NBT is fully appreciated.
"The National Chamber which has always promoted the development of SME’s welcomes the concessions granted to this sector. Reducing the investment threshold to Rs. 25 million with a 4 year tax holiday will encourage new SMEs thereby promoting rural economic development. The Chamber is pleased to note the allowing of pre-commencement expenses as a reduction of statutory income for SME’s. Setting up of SME Bank Units by State banks in each district will alleviate the long standing issue of access to funding by the SME’s. The 5 year tax holiday extended to Sri Lankan expatriates will promote entrepreneurship, investment and savings throughout the country.
"Recognition of tourism as a key revenue earner and providing further tax holidays and incentives will help achieve the targeted development. To cater to up-market tourists, the reduction of import duty by 50% motor coaches and tyres etc will enhance the quality of services offered.
To further strengthen the Apparel Industry, the key foreign exchange earner, a new act will be created to provide services in supply chain management, logistics etc., in the region to position as a trading hub.
To increase R&D activities by the private sector, for the first time a triple deduction is offered to research conducted with State institutions and we believe this is needed to stay competitive in the global market. Further, reduction of income tax for R&D companies to 20% will encourage new entities to enter into this unchartered area.
"We are happy to note, that the unabsorbed VAT input as of 12/31/2010 could be claimed from any taxes effective 1/1/2012. In fact, similar reduction was given in 2011 against VAT liability. However, it was later restricted to 5% of the net VAT liability. We recognize the prominence given for Import Replacement in areas such as Cement, Steel, Pharmaceuticals, etc., as this will provide more opportunities for Sri Lankan companies to produce these items locally.
"National Chamber recognized 2012 budget proposals as steps towards achieving the targeted development of the country by giving a special boost to the SME’s. However, we note that the successful achievement of these expectations requires firm commitment from state officials and timely implementation of said proposals," the Chamber said.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=39577
