News
COPF: Tax concessions granted to BoI enterprise should be scrutinised
‘There cannot be special status for anyone when across the board 30% tax is imposed on exporters’
By Shamindra Ferdinando
Committee on Public Finance (COPF) Chairman and SJB MP Dr. Harsha de Silva says unprecedented tax concessions given to HCL Technologies (HCL) that entered into an agreement with John Keels Holdings (JKH) last year should be reviewed in view of the imposition of a controversial 30 percent tax across the board on companies in the exports sector with effect from 01 Nov.Dr de Silva emphasised that reappraisal was necessary as the proposed tax would be imposed in line with the recent staff-level agreement reached with the International Monetary Fund (IMF).

Noting that the agreement hadn’t been tabled in Parliament yet, the Colombo District MP said that India-Sri Lanka joint enterprise couldn’t be granted special status in terms of the Strategic Development Project Act, No. 14 of 2008 at a time the country was in dire straits.
Dr. de Silva said on Saturday (15) that particular Act should be rescinded in view of the agreement with the IMF. The economist questioned the unchecked authority enjoyed by the Minister, assigned that particular subject, to grant concessions up to a period of 25 years.Responding to another query, Dr. de Silva said that the economy was in such bad shape the whole process of granting concessions to investors should be reevaluated.
Failure to do so could trigger public protests at an unprecedented scale. SJB leader Sajith Premadasa has repeatedly flayed the Wickremesinghe-Rajapaksa government over declaration of a range of taxes. The COPF on Oct 04 granted approval for sweeping tax concessions to the HCL-JKH enterprise, less than 24 hours after rejecting the proposal made by Chairman of the Board of Investment (BoI) Raja Edirisuriya for exemptions of VAT, Dividend tax, PAL, CESS, Income tax, customs duty, etc.
At the time of the new appointment, Edirisuriya served as the Executive Director of the Colombo Port City Development Project. One-time Chairman of bankrupt Mihin Lanka succeeded Sanjaya Mohottala, who resigned after having appointed 29 staff with salaries over Rs 700,000 a month.
Under the agreement between HCL and JKH, the former occupied 80 percent of space in the 30-storey Grade –A state-of-the–art Cinnamon Life complex. The finalization of that agreement and the inauguration of the project was attended by the then BoI Chairman Sanjaya Mohottala, JKH Chairman Krishan Balendra, Indian High Commissioner Gopal Baglay, the then Finance Minister Basil Rajapaksa, HCL Technologies Chief Financial Officer Prateek Aggarwal, and Corporate Vice President Srimathi Shivashankar.
The Island sought an explanation from Dr. de Silva why the COPF granted approval having lambasted the top management of the BoI for seeking a far-reaching tax holiday at a time the bankrupt government was taxing all, regardless of the consequences. Dr. de Silva said the parliamentary watchdog committee didn’t enjoy executive powers.
Referring to a statement issued that had been issued by Parliament on Oct 04 in this regard, Dr. de Silva said though the parliamentary watchdog committee granted approval for the relevant after receiving required information, the basis for giving such tax concessions should be properly analyzed and a appropriate policy prepared in future to determine the tax concessions depending on the size of the investment.
Minister Vidura Wickramanayaka, State Ministers Shehan Semasinghe, (Dr.) Suren Raghavan, Members of Parliament Anura Priyadharshana Yapa (Dr Harsha de Silva’s predecessor), Chandima Weerakkody, Mayantha Dissanayake, Harshana Rajakaruna and Prof Ranjith Bandara (Chairman, Committee on Public Enterprises) attended the Oct. 04 COPF meeting.HCL entered Sri Lanka in 2020 as the country was rapidly heading towards economic crisis.
The COPF earned praise from the public for the stand taken at the Oct 03 meeting where the outfit strongly opposed India-based Tech Company a slew of tax concessions spanning more than 10 years, including an exemption from the income tax for 17 years, with the final five at half the rate. Both de Silva and COPF member Dr. Suren Raghavan declared the BoI proposal was unacceptable. At one point SLFPer Raghavan said that he didn’t want his house to be attacked again. Referring to the destruction of his house during the July 1983 riots, Dr. Raghavan said that the same fate would befall him if the COPF granted such concessions. However, MP de Silva advised Dr. Raghavan not to be so dramatic.
The COPF took a strong stand after the top management of the BoI failed to answer Dr. de Silva’s query regarding the basis for such large tax concessions. The MP asked: “You are asking the COPF to grant a 12-year total tax holiday. If this was approved, what is the tax benefit that would be given to the company and the foregone tax to the Government?”
An irate de Silva said “This is embarrassing, Chairman. This is not how to run a BoI. We have given you ample time to come up with the figures. You are embarrassing the Government, coming here asking for a massive tax break for 17 years. Can you run a county like this Chairman? Even a tea boutique is run better. You should feel very very bad and be ashamed. Your conduct is not professional, this is not how to conduct official business. In my entire career, I have not faced such a hopeless situation like this.” Dr. de Silva questioned Edirisuriya over his role in the Colombo Port City development. The COPF asserted that the BoI was struggling to cope up with its duties, and responsibilities, and run in an extremely unprofessional manner.
News
Lanka enters new phase of prosecutions as hurdles clear
MONETABRIEF –The prosecution of high-profile individuals from the former Rajapaksa administrations is set to escalate this month with the clearing of legal hurdles and administrative bottlenecks, according to officials involved in the process.
Former president Gotabaya Rajapaksa’s attempt to secure an order preventing his arrest in connection with the Easter Sunday massacre was turned down by the Court of Appeal on Thursday.
An overseas travel ban has been in operation against Rajapaksa since June, but the Criminal Investigations Department made no move to question him. He instead filed a writ application seeking an order preventing his possible arrest.
President of the Court of Appeal Rohantha Abeysuriya noted that the court would not interfere with the investigative process. Any attempt by the court would amount to an obstruction of the investigation.
In an unrelated case, the same court rejected an application by opposition legislator Dilith Jayaweera seeking the quashing of a contempt charge filed against him by the Fort magistrate. The charges against Jayaweera and a few other opposition politicians are expected to be taken up in the coming week.
Jayaweera and other opposition politicians — Wimal Weerawansa, Udaya Gammanpila, Sugeeshwara Bandara, and Asanka Navaratne
— were hauled up over their remarks relating to the arrest of Suresh Sallay, the former head of the State Intelligence Service.
SLPP academic Mahinda Pathirana is also charged over his public comments about Sallay’s arrest in February under the draconian Prevention of Terrorism Act.
Former president Mahinda Rajapaksa’s son, legislator Namal Rajapaksa, is already in remand custody following his arrest in connection with three cases of bribery and money laundering relating to the 2013 Airbus deal and the Krrish property development in Colombo.
Although Namal has been granted bail in the Airbus money laundering charge, he is in custody until October 13 over the bribery charge relating to the same Airbus transaction. His arrest is under a provision of the Anti-Corruption Act that does not allow a magistrate to grant bail unless under exceptional circumstances.
Meanwhile, his mother Shiranthi Rajapaksa, who had been asked to report to the Financial Crimes Investigations Division on September 24, was a no-show and was yet to return from Singapore.
She had travelled overseas on September 16, and a family spokesman said she was handed the FCID summons at the departure lounge of Bandaranaike International Airport just before she boarded a flight to Singapore.
At the time, the family spokesman said she was due to return in three days.
“We will see greater momentum in the legacy cases in the coming weeks,” an official involved in the prosecutions said.
“We have cleared the legal hurdles to press ahead with more arrests,” he said.
“We are working on a few administrative issues which will be resolved very soon.”
The controversial prosecution of former President Ranil Wickremesinghe is dragging on without him being formally indicted since his arrest in August last year. The Fort magistrate has listed the case again for November 11, when the Attorney-General is expected to report on his decision regarding action against Wickremesinghe.
News
Police warn: Court evaders face property seizure
Police have reminded the public that courts have the power to take legal action against individuals who evade arrest or remain in hiding after warrants have been issued against them.
Police said that under Section 60 of the Code of Criminal Procedure Act No. 15 of 1979, a court could issue a written proclamation requiring a person evading arrest under a warrant to appear at a specified place and time.
The proclamation must allow the person at least 30 days to appear before court, Police said.
If the person fails to appear even after the proclamation has been issued, the court may take further action under Section 61 of the Act.
This includes issuing an order for the attachment of the movable or immovable property belonging to the person concerned.Police issued the reminder highlighting the legal measures available against persons who deliberately evade arrest and remain in hiding after warrants have been issued.
News
Nearly 20 Iranian tankers stranded off Lanka amid US sanctions
Around 20 Iranian oil tankers are reportedly stranded about 15 nautical miles off Sri Lanka’s southwestern coast, with several vessels facing shortages of food, fuel and fresh water amid tightening US sanctions and maritime restrictions, The Wall Street Journal reported.
According to the report published on Thursday (1), US officials have in recent weeks urged Sri Lanka to prevent local vessels from supplying essential provisions to the tankers and their crews.
The report, citing Sri Lankan Government documents and companies involved in supplying the vessels, said the US had raised concerns over assistance being provided to the sanctioned tankers.
The situation follows the United States’ decision to reimpose a maritime blockade of the Strait of Hormuz in July, which has reportedly left dozens of Iranian and Iran-linked tankers involved in transporting sanctioned oil to China stranded near Asian countries, including Sri Lanka and Malaysia.
Most of the vessels are reportedly empty tankers that had previously transported Iranian crude to Asia, often through ship-to-ship transfers, before preparing to return to Iran for additional cargo.
The WSJ reported that the US Embassy had warned Sri Lanka in August that it was monitoring 19 Iranian tankers off the country’s western coast and had raised the possibility of secondary sanctions against companies providing services to sanctioned vessels.
Sri Lankan authorities have maintained that the vessels are located outside the country’s 12-nautical-mile territorial waters and that the Government is not providing them with logistical assistance.
Meanwhile, shipping companies told the WSJ that obtaining approval to supply essential items, including food, drinking water and fuel, as well as repair services, to the Iranian vessels had become increasingly difficult.
Separately, Reuters reported in late August that 27 sanctioned Iran-linked tankers were waiting off Sri Lanka without cargo.
The Trump administration has also imposed additional sanctions on Iran and warned countries and companies trading with Tehran of potential consequences, as Washington seeks to pressure Iran to make concessions amid the ongoing conflict.
Similar concentrations of Iranian-linked tankers have been reported off Malaysia, where waters have historically been used for ship-to-ship transfers of Iranian crude destined mainly for China.
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