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Capital Gains Tax to hit CSE?

+11
anges
nimantha80
fireshelter
EquityChamp
VALUEPICK
A+
worthiness
samaritan
Joe007
Jeremy
Gainer
15 posters

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1Capital Gains Tax to hit CSE? Empty Capital Gains Tax to hit CSE? Tue Mar 08, 2016 1:46 am

Gainer

Gainer
Associate Director - Equity Analytics
Associate Director - Equity Analytics

Capital Gains Tax to hit CSE?
Rs. 350 b in value wiped off stock market so far this year
CSE not consulted before directive, stock market officials surprised
Questions why Share Transaction Levy retracted if replaced with Capital Gains Tax
Tax expert says positive move to strengthen public revenue

An already-dampened Colombo Stock Exchange (CSE) could be severely hit if an unforeseen directive to impose the Capital Gains Tax is implemented by the Government after a hiatus of 29 years, a senior official warned yesterday.
CSE Chairman Vajira Kulatilaka told the Daily FT that the perceived impact of capital gains tax after many years of absence would be far larger than the actual impact, likely resulting in a further decline of trading activities on the Bourse.
“People will definitely have a negative perception of this and that impact is going to be larger than the real impact of the tax and how much people will be taxed due to this,” he stressed.
On Friday (4) due to continual pressure to promote fiscal consolidation the Cabinet held a special meeting and approved new tax reforms. The possible reintroduction of the Capital Gains Tax after three decades was the highlight of the meeting.
The move came as a surprise in the backdrop of Bourse earnings dwindling over the past few months. CSE’s market capitalisation as of last week amounted to Rs. 2,588 billion, down by 12% from Rs. 2,938 billion as at end 2015. The All Share Index and S&P SL 20 Index were down by 12% year-to-date as well.
Noting that Cabinet did not consult CSE officials before taking a decision which would directly impact the stock market, Kulatilaka said more clarity on this issue was needed without further delay.
  “It was quite a surprise for us actually. They should not keep us in the dark and we cannot expect the CSE to calm down and trade as they are already distressed with the way markets are behaving. They should have also publicised the rates and the duration for which capital gains will be taxed,” he asserted.
Meanwhile, he questioned why the Government removed the Share Transaction Levy, which traders and investors were already familiar with, if they were planning to introduce the Capital Gains Tax. “We were happy about the Share Transaction Levy being removed recently from the Budget but now with the Capital Gains Tax, we are back to where we started or even worse; now we will have to wait and see.”
Kulatilaka pointed out that liquidity had been a significant issue for the CSE and enforcement of the new policy could starve the stock exchange of much-needed funding flow.
  “The stockbrokers are very dissatisfied with this move. In addition we all know how our stock market is faring. How will positivism spread with such situations occurring? I’m aware of the budget deficit problems the country is facing, however massive capital gains being available to be taxed right now is also questionable,” Kulatilaka opined.
However, a tax expert speaking on condition of anonymity told the Daily FT that from a social inequity point of view, the Capital Gains Tax should be re-introduced into the tax system.
“The Government has to tap all of its resources to meet its revenue targets because right now we have no other choice. In my opinion Sri Lanka has one of the most liberal tax systems in the world. The stock market was given a long grace period without this tax and therefore I won’t buy that it would be the sole reason to deprive stocks further. However I agree that the Government should have kept the Share Transaction Levy if it was going to come up with this as the impact would be less,” the industry expert said.
- See more at: http://www.ft.lk/article/529588/Capital-Gains-Tax-to-hit-CSE?#sthash.9wpcMVDA.dpuf

2Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Tue Mar 08, 2016 6:37 am

Jeremy

Jeremy
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Finally CSE chairman Vajira Kulathilaka open his Kanu mouth. If he think market is going to come down who is the pundits who says it's going to go up. Why he waited all this time to say this when we all knew.
Like to see the reaction of SEC chairman, he is a stooge of the government and surely he will say market will go up if SEC investigate all traders and trades that makes capital gains. Smile

3Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Tue Mar 08, 2016 7:12 am

Joe007


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

No I do not think that it is appropriate to introduce car on CSE. I believe that they will bring back the levy on transactions but it is preferable to bring back quite after a while until the market is settled.

4Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Tue Mar 08, 2016 7:55 am

samaritan


Moderator
Moderator

It is very unlikely that the Govt will enforce CGT to share transactions. But in case they do so it will spell death knell to the already ailing stock market with dampened and dented investor sentiment.

5Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Tue Mar 08, 2016 8:04 am

samaritan


Moderator
Moderator

GMNet wrote:Finally CSE chairman Vajira Kulathilaka open his Kanu mouth. If he think market is going to come down who is the pundits who says it's going to go up. Why he waited all this time to say this when we all knew.
Like to see the reaction of SEC chairman, he is a stooge of the government and surely he will say market will go up if SEC investigate all traders and trades that makes capital gains. :)

IT IS LIKE EXPECTING A DEAD MAN'S TOOL TO GO UP!

6Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Tue Mar 08, 2016 10:16 am

worthiness


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

It is unlikely share transactions would be hit by CG tax. If occurs worst scenario applies for the market.

7Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Tue Mar 08, 2016 10:51 am

A+


Manager - Equity Analytics
Manager - Equity Analytics

Government can collect tax from people under CGT only if they apply it for past periods say 2008-2010. Because that's where most of the gains were made and there after it was losses. And definitely they are going to collect nothing  if they are targeting the activities between 2015-2016 because all are capital losses.

8Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Tue Mar 08, 2016 10:52 am

samaritan


Moderator
Moderator

worthiness wrote:It is unlikely share transactions would be hit by CG tax. If occurs worst scenario applies for the market.

Exactly right. There were allegations that trillions of rupees has been misappropriated by the earlier regime. Were they able to trace a single cent?  NO

There were allegations of market manipulations. Were they able to book any wrong doer? NO

As at present when the market is put on a life saving machine if they impose the CGT, who will be affected?  THE POOR RETAIL INVESTORS.

Ministers put their backs on Land Cruisers and having a Gala time. Why can't they drive around in Marutis and set a good example of Yahapalanaya. Big mouths with some paper qualification and the so called experts are the root cause of the ruination of the Country's economy for the simple reason that they lack 'Common sense'.

9Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Tue Mar 08, 2016 12:11 pm

VALUEPICK

VALUEPICK
Expert
Expert

This has become hot news. Even if they implement it should be good for investors and not for very short term traders. It is highly unlikely there will be capital gain tax on shares at this juncture. It is just a speculation. May be wealth tax.

10Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Tue Mar 08, 2016 12:23 pm

EquityChamp

EquityChamp
Moderator
Moderator

I guess if they implement it it will going to be an utter failure like many taxes they tried to implement through mini budget in 2015. They were challenged in courts.

The biggest problem the tax collecters will face is to establish in price and out price for calculate any gain or loss. in case of stocks investors are trying to average out when shares are falling and they will tend to sell if the selling price is higher than the average cost. In this case the first purchase investor done can be far higher than the first sale price he do. Then investor will realize profits from his average cost but from tax collector's point of view the investor has made a loss. This biggest issue was the main reason that the UNP government in 2001-2004 period scrapped the idea to introduce capital gain tax on share transactions but to change it to share transaction levy. This time arround too the same will happen. CGT will not work in CSE.

11Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Tue Mar 08, 2016 12:24 pm

samaritan


Moderator
Moderator

VALUEPICK wrote:This has become hot news. Even if they implement it should be good for investors and not for very short term traders. It is highly unlikely there will be capital gain tax on shares at this juncture. It is just a speculation.  May be wealth tax.

I referred to 'tax experts' in my earlier posting.Capital Gains Tax to hit CSE? Icon_lol

Hope the CGT on CSE at this juncture is only a speculation. In my opinion, if at all it can be considered at a later date when the market is performing well.

12Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Tue Mar 08, 2016 12:30 pm

samaritan


Moderator
Moderator

EquityChamp wrote:I guess if they implement it it will going to be an utter failure like many taxes they tried to implement through mini budget in 2015. They were challenged in courts.

The biggest problem the tax collecters will face is to establish in price and out price for calculate any gain or loss. in case of stocks investors are trying to average out when shares are falling and they will tend to sell if the selling price is higher than the average cost. In this case the first purchase investor done can be far higher than the first sale price he do. Then investor will realize profits from his average cost but from tax collector's point of view the investor has made a loss. This biggest issue was the main reason that the UNP government in 2001-2004 period scrapped the idea to introduce capital gain tax on share transactions but to change it to share transaction levy. This time arround too the same will happen. CGT will not work in CSE.

In my opinion it would be advisable to even hold back the reintroduction of TL in order to give a boost to the market. Allow the broiler to gain weight before consumption ought to be a better strategy than killing it now.

13Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Tue Apr 12, 2016 4:28 pm

EquityChamp

EquityChamp
Moderator
Moderator

EquityChamp wrote:I guess if they implement it it will going to be an utter failure like many taxes they tried to implement through mini budget in 2015. They were challenged in courts.

The biggest problem the tax collecters will face is to establish in price and out price for calculate any gain or loss. in case of stocks investors are trying to average out when shares are falling and they will tend to sell if the selling price is higher than the average cost. In this case the first purchase investor done can be far higher than the first sale price he do. Then investor will realize profits from his average cost but from tax collector's point of view the investor has made a loss. This biggest issue was the main reason that the UNP government in 2001-2004 period scrapped the idea to introduce capital gain tax on share transactions but to change it to share transaction levy. This time arround too the same will happen. CGT will not work in CSE.

What I predicted on early seems to be coming through. The government has realized the flop for the second time and thats why they revert again to STL. The CGT risk is very low now. Finally what the government did was to create some more panic for the betterment of bargain hunters to help them collect good shares at rock bottom prices. They gave lotteries with price money FOC to bargain hunters. The lowest level of the market for 2016 was on 9th March and since then market is up by 8%+. A nice risk free profit similar to the vehicle permits they offer to MPs. Phew:x
http://www.cse.lk/cmt/upload_cse_announcements/5241460446832_.pdf

14Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Wed Apr 13, 2016 1:26 am

Joe007


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

STL is re imposed as expected. CGT on property investment is expected soon. But the CGT on share investment is very questionable.

15Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Wed Apr 13, 2016 1:33 am

fireshelter

fireshelter
Associate Director - Equity Analytics
Associate Director - Equity Analytics

Government will not impose CGT

16Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Wed Apr 13, 2016 8:29 am

nimantha80


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

Joe007 wrote:STL is re imposed as expected. CGT on property investment is expected soon. But the CGT on share investment is very questionable.
first 6500 then 6800.we had no doubts when it was 5800.

17Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Wed Apr 13, 2016 2:45 pm

anges


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

look at the briht side it was announced mkt up by 77 points ! i suggest a increase on this tax then the mkt will move up by 144 points ! lol ! crazy mkt

18Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Wed Apr 13, 2016 7:33 pm

EquityChamp

EquityChamp
Moderator
Moderator

Market should move based on this news is not because cost to investors gone up by .3% but the headache of CGT is no more. Clearly that relives lot of pressure and clear lot of uncertainties.

19Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Wed Apr 13, 2016 7:35 pm

Teller

Teller
Moderator
Moderator

Don't loose your value money by investing at these levels.

20Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Wed Apr 13, 2016 7:52 pm

EquityChamp

EquityChamp
Moderator
Moderator

It depends Teller. I think all market participants are aware of risk factors. If the selection of financial assets are quality enough the risk levels can manage.

21Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Thu Apr 14, 2016 12:37 am

chamil1


Manager - Equity Analytics
Manager - Equity Analytics

Teller wrote:Don't loose your value money by investing at these levels.

Agree with EC . No sell signal still.  But be vigilant as we are not out of the woods yet.

22Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Thu Apr 14, 2016 7:50 am

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics

They have reintroduced Share Transaction Levy instead of Capital Gains Tax , which is a wise step , so the topic is no more.

The total tax per transaction from both parties is 0.6 % . (0.3 + 0,3) What was the previous rate ?

23Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Thu Apr 14, 2016 9:23 am

Yahapalanaya

Yahapalanaya
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

samaritan wrote:
worthiness wrote:It is unlikely share transactions would be hit by CG tax. If occurs worst scenario applies for the market.

Exactly right. There were allegations that trillions of rupees has been misappropriated by the earlier regime. Were they able to trace a single cent?  NO Yes They are in parole

There were allegations of market manipulations. Were they able to book any wrong doer? NO What happened Godehewa

As at present when the market is put on a life saving machine if they impose the CGT, who will be affected?  THE POOR RETAIL INVESTORS.Market is currently in Bull run

Ministers put their backs on Land Cruisers and having a Gala time. Why can't they drive around in Marutis and set a good example of Yahapalanaya. Big mouths with some paper qualification and the so called experts are the root cause of the ruination of the Country's economy for the simple reason that they lack 'Common sense'.

24Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Thu Apr 14, 2016 12:37 pm

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics

Yahapalanaya wrote:
samaritan wrote:

Exactly right. There were allegations that trillions of rupees has been misappropriated by the earlier regime. Were they able to trace a single cent?  NO Yes They are in parole

There were allegations of market manipulations. Were they able to book any wrong doer? NO What happened Godehewa

As at present when the market is put on a life saving machine if they impose the CGT, who will be affected?  THE POOR RETAIL INVESTORS.Market is currently in Bull run

Ministers put their backs on Land Cruisers and having a Gala time. Why can't they drive around in Marutis and set a good example of Yahapalanaya. Big mouths with some paper qualification and the so called experts are the root cause of the ruination of the Country's economy for the simple reason that they lack 'Common sense'.


montessori kollek vage gon uththara liyanna epa.

If not we can write "not only those so called experts their supporters too have the same ledey - lack of 'Common sense'. "

25Capital Gains Tax to hit CSE? Empty Re: Capital Gains Tax to hit CSE? Thu Apr 14, 2016 5:21 pm

Yahapalanaya

Yahapalanaya
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

Chinwi wrote:
Yahapalanaya wrote:
samaritan wrote:

Exactly right. There were allegations that trillions of rupees has been misappropriated by the earlier regime. Were they able to trace a single cent?  NO Yes They are in parole

There were allegations of market manipulations. Were they able to book any wrong doer? NO What happened Godehewa

As at present when the market is put on a life saving machine if they impose the CGT, who will be affected?  THE POOR RETAIL INVESTORS.Market is currently in Bull run

Ministers put their backs on Land Cruisers and having a Gala time. Why can't they drive around in Marutis and set a good example of Yahapalanaya. Big mouths with some paper qualification and the so called experts are the root cause of the ruination of the Country's economy for the simple reason that they lack 'Common sense'.


montessori kollek vage gon uththara liyanna epa.

If not we can write "not only those so called experts their supporters too  have the same ledey - lack of 'Common sense'. "
Your leaders in Parole hurt you!!! Very Happy Very Happy Very Happy

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