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New tax bill: Sri Lanka’s corporates wary about ‘subtle’ non-deductions

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Say draconian powers drafted to be given to Inland Revenue Chief

Calls for independent body to get a fair hearing

By Sanath Nanayakkare

The new tax bill is one that demotivates taxpayers from being compliant and one that restricts existing taxpayers from their legitimate deductions, Nisreen Rehmanjee, head of corporate finance, group tax and social entrepreneurship project, John Keells Group said on Tuesday.

She said so at a webinar hosted by the Ceylon Chamber of Commerce (CCC) titled,” Implications of Amendments to the Inland Revenue Act.”

Predominantly taking a corporate view of the bill, she said,” Considering the financial situation of the country, I think that everyone has to pay more tax. That is a policy issue and I don’t have any problems with that. But we are concerned about proposed provisions on deductions, tax administration and taxpayer rights. The bill is attempting to collect taxes from those who are already paying and deny legitimate deductions that are incurred in the production of income. For example, in terms of new provisions, interest is considered to be a revenue expense and it is not a capital expense because it is basically what you pay for use of money for a year; and so it’s revenue. When it comes to capital assets it bears a condition that it has to be in use. I think that they have actually restricted this because interest is not a capital expense; it is not something you need to capitalize on because the new law recognises it as a revenue expense under section 12 and allows you a deduction. So I think it is a more restrictive deduction than an enabling provision.”

Further speaking she said,” There is a lot of significant uncertainty right now as to how exchange rate gains and losses are taxed. If one had losses why not allow those losses against gains and allow taxes to be paid on a net amount considering the very high rate of tax? The corporates are very concerned about such subtle non-deductions.”

“You should put your effort into actually broad-basing the tax net, but you are going after the people who are paying taxes. Shouldn’t that time and effort be actually spent on looking at people who are not paying taxes and who don’t have files?”

“Going to the Inland revenue Department and getting an estimate is a very judgmental call now. If you are saying that my profits this year are going to be lesser than last year, and therefore, I am estimating lower. If the assessor disputes that and the taxpayer has to go to the Tax Appeals Commission, it is an additional burden on a compliant taxpayer. We are getting crazy kind of assessments which are not defendable. IRD has a period of 30 months to make an assessment, but the tax payer is given only 14 days to analyse it, do the legal consulting and draft the appeal and submit it. That is very unfair. If the process is to be tightened then let’s reduce the time given to IRD to dispute the tax return to 18 months and make it more efficient. I think taxpayers need an independent body where they can go to and get a fair hearing before they go to the Tax Appeals Commission,” she said.

Sulaiman Nisthar, partner-tax, Ernst & Young said that agro farming, agro- processing and agro manufacturing would continue to enjoy tax concessions, but the definitions of these wordings need to be carefully evaluated.

Suresh Perera, principal of the tax and regulatory division of KPMG Sri Lanka said,” A particular provision of the bill gives draconian powers to the Commissioner General of IRD to come up with an estimate and there is no provision for it to be challenged. You have to pay taxes according to that estimate and if you don’t pay, then it is considered non-compliance. You don’t have a holdover relief position. In such a situation, you get only an extension period of six months to pay that amount. This is going to be a methodology for Commissioner General to collect taxes; just make any estimate that he wants which can’t be challenged. This is something that you need to act now and not later on because once this becomes law under article 88(3) of the Constitution, it will be too late to do anything about it.”

Duminda Hulangamuwa, senior partner and head of tax, Ernst Young & Sri Lanka said, “We made representations to the President, the Governor of the Central Bank and the Treasury Secretary on behalf of middle income individuals who are liable to pay high taxes when the new bill becomes law, but the message we got from them was they also didn’t like to increase taxes, but they were left with no other choice given the current economic realities and discussions with the IMF.”



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Trio of collections to mark Vogue Jewellers’ 60th anniversary

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Marking another milestone, Vogue Jewellers, Sri Lanka’s premier jeweller staged an unprecedented trio of jewellery collections at a lavish jewellery show held at Shangri-la, Colombo. The event featured Royal Majestic Collection – the third volume of Sri Lanka’s first ever branded patented 22 karat gold jewellery; Vogue Lace Collection – a Diamond encrusted 22 karat gold necklace collection inspired by Beeralu lace and the luxurious Diamond Necklaces Collection along with the complete set of Vogue Lotus Bridal Jewellery – 22 karat Kandyan bridal jewellery collection. The collections released exhibit Vogue’s instinctive ability to focus on fashion, uniqueness and everlasting value.

Each handcrafted necklace of the Royal Majestic Collection screams grandeur, wealth and value. They are absolutely versatile as they can be worn as a grand long centerpiece or by detaching the tassels that can be worn as a pair of matching earrings, and even by detaching the pendant to wear with a plain chain. They are 22 karat solid gold creations, Pure Brilliance SWAROVSKY Cubic Zirconia or genuine coloured stone encrusted necklaces that come with a 1 gm branded gold coin. Royal Majestic Collection with many designs. Ideal for gift giving, to pass on to the next generation and as a sound investment, these masterpieces are absolutely stunning creations.

Vogue Lace Collection, inspired by the traditional Beeralu lace is an intricately hand-crafted Diamond and Pearl encrusted 22 karat fine jewellery. As delicate as lace in their appearance, the luxury collection of necklaces and choker necklaces are truly exotic. Handcrafted to perfection, every necklace of this signature collection reflects mastery in design, craftsmanship and sheer elegance.

The newest array of Diamond Necklaces and Earrings released at the Vogue jewellery show brings a distinctly modern point of view to Diamond jewellery. Inspired by Vogue’s rich heritage in Diamond jewellery, the newest Vogue Diamond Collection comprises necklaces and earrings, accented with white gold, and in the case of some, rose gold, for that touch of colour. Each creation offers optimal style versatility with maximum sparkle.

In addition to the three new collections that were released at the jewellery show, the complete set of the 22 karat Kandyan Bridal Jewellery was paraded. Inspired by the much-revered Lotus, the divine symbol of purity, resilience and faithfulness, the Vogue collection is a made-to-order complete set of Kandyan bridal jewellery that includes the headdress and its accompaniments, earrings, seven necklaces, waist chain and the bangles. Available as a complete set or as individual items, it is a collection for those seek evolved designs in keeping with local traditions.

The jewellery show was choreographed by renowned Designer and Fashion Consultant, Michael Wijesuriya. Channa Wijewardena’s dance troupe lead by Aseka Wijewardena and Opera singer Stephane Siriwardhena added colour to the event. An elegant coffee table book was introduced to the distinguished invitees. The Kandyan bride was dressed by the popular bridal dresser, Mr. Dhananjaya Bandara.As with any item available at Vogue, the new collections too come with a lifetime guarantee. Visit the Vogue flagship store at Colpetty or any of its branches in Nugegoda, Kandy, Negombo and Kurunegala.

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Innovate Lanka concludes with Demo Day and Finale

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Innovate Lanka recently concluded with its 2022 Demo Day and Finale, where 10 finalists pitched their exceptional ideas to a high profile panel that encompassed Corporate Leaders, Domain Experts and Angel Investors.

Adjudged this year’s winner, AGC Innovate (Pvt) Ltd is a sustainable initiative pioneering technology to convert non-recyclable waste plastics into an industrial raw material called Plastic Modified Asphalt Concrete (PMAC) in Sri Lanka, which will be used for paving roads, car parks and yards. Since its inception in 2018, the company has already completed more than 15 projects, including for RDA, PRDA, Cargills (Ceylon) PLC, John Keells Holdings (Cinnamon Life and Crescat), CBL, French Embassy, etc.

The runner-up for 2022 was DirectPay (Pvt) Ltd, which connects everyone digitally, bringing them one step closer to a cashless society, by introducing modern payment methods for the financial and telecom industries. DirectPay is a FinTech application that provides direct debit facilities, Internet Payment Gateway and LankaQR and JustPay (National QR) technologies to enable customers to make payments across any boundary.

Also awarded was the “Best Female Entrepreneur” title, which was handed out to Bluefish Ceylon (Pvt) Ltd. This fish food manufacturer is dedicated to providing ready-to-eat, flavourful, and nutrient-dense fish products made with hand-picked natural ingredients with an authentic and distinct taste, while adhering to 100% hygiene standards.

A national initiative bringing together Sri Lanka’s main startup and SME ecosystem partners, Innovate Lanka is a program initiated by the Council for Startups (CFS) of The Ceylon Chamber of Commerce (CCC), the Lankan Angel Network (LAN) and Sri Lanka Association for Software Services Companies (SLASSCOM). This program will ideally also serve up the systematic change required to rebuild Sri Lanka, by providing personalized support for every entrepreneur while offering a one-stop-shop for incubation and acceleration, until exit, at the global level.

In addition to the winner, runner-up and “Best Female Entrepreneur” title holders, the Innovate Lanka Demo Day and Finale also offered up presentations by other top 10 finalists. These included WorkXFlow (Pvt) Ltd, EDUS Lanka (Pvt) Ltd, INGROW Holdings (Pvt) Ltd, Ceylon Dhee Ayurved (Pvt) Ltd, Stag Space (Pvt) Ltd, Edutoys (Pvt) Ltd and CrossBorder Payments (Pvt) Ltd.

Garnering an exemplary 70+ entries during its initial, applications stage, Innovate Lanka later went on to thoroughly vet these submissions, ultimately whittling down its pool of startups and SMEs to just the top 10. This was achieved via an intensive pitching and evaluation process, which was facilitated by LAN.

Said LAN Chairperson Chandi Dharmaratne; “We at LAN, along with our global, national and eco-system partners, and the many incubators and accelerators that participated, are committed to supporting SMEs and entrepreneurs during the tough economic times ahead. Programs such as Innovate Lanka will keep dreams of scaling alive, until such time as our economy recovers and more startups and SMEs can bootstrap themselves into the global marketplace.”

Commenting further, CFS Chairman Prajeeth Balasubramaniam said; “Entrepreneurship is critical to stimulate long-term economic growth and national prosperity. As an entrepreneur, today there is no one private sector body representing them to help in all spheres of growth at the different stages. Innovate Lanka platform was created with this in mind as a national initiative that brings all the start-up and SME ecosystem partners together”.

Adding to this, SLASSCOM Chairman Ashique Ali said; “We were happy to partner in this programme as start-ups play a significant role in innovation, creating social, economic, and environmental impact, and generating export revenue. There are a significant number of start-ups which have the potential to scale regionally and globally. SLASSCOM together with other ecosystem partners aim to support these startups through their incubation to scale up journey, realising SLASSCOM’s goal of catalysing 1000 startups by the year 2025.”

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LSEG Foundation joins ‘Manudam Mehewara’ initiative driven by corporate Sri Lanka

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Aiming to Assist Over 200,000 Vulnerable Families

The LSEG (London Stock Exchange Group) Foundation pledged its support as a corporate donor of the ‘Manudam Mehewara’ emergency relief programme, initiated by Dialog Axiata PLC, MAS Holdings, Hemas Holdings PLC, execution partner Sarvodaya Shramadana Movement and independent auditor PwC Sri Lanka, together with corporate partners CBL Group, Citibank, Sunshine Holdings PLC, Huawei Technologies Lanka Co., Pvt Ltd, and Unilever Sri Lanka.

 Launched to support over 200,000 vulnerable families and communities across the country amidst the ongoing economic crisis, the ‘Manudam Mehewara’ initiative has currently distributed emergency relief across all 25 districts in Sri Lanka, where over 115,000 families in-need have been assisted to date. The Manudam Mehewara programme will conduct its relief efforts until a sustainable benefit transfer system is established in the country through an effective economic recovery plan.

 Speaking on the occasion, Pulasthika Wirasinha – Head of Human Resources, LSEG Sri Lanka stated, “It has been inspiring to witness the many corporates who have stepped up to the frontline of Sri Lanka’s economic recovery. At LSEG, we embody the spirit of empowering communities, and we would like to thank the Manudam Mehewara corporate coalition for the opportunity to help in this time of need”.

 Addressing the gathering, Hong Zhou Wong – Group Chief Financial Officer, Dialog Axiata PLC commented “Dialog along with our corporate partners rose to the call of need in early April by initiating Manudam Mehewara with the aim of assisting and supporting the most impacted communities across Sri Lanka in the backdrop of devastating economic hardship. Our partners and donors have not only contributed their financial aid to this initiative but also their resources and expertise to pave the road to recovery for Sri Lanka. On behalf of Manudam Mehewara, I would like to thank LSEG for joining us in this effort. Since April, Manudam Mehewara has supported over 115,000 families across all districts, but our journey has only just begun as we aim to reach 200,000 families. To see our mission to fruition, I urge other like-minded corporate partners to join us in this collective force for good”.

Manudam Mehewara invites all Sri Lankans and corporates to join its shared mission of supporting the most vulnerable families across the country and contributing to this cause. Individuals can now simply donate via their credit/debit card on the website – https://dlg.lk/donate/  or through a bank transfer, Star Points transfer, eZ Cash, genie, or even through a mobile top-up to 077 642 1421. Donors can also conveniently donate through a range of payment options via www.karuna.lk, Sri Lanka’s First Cause-verified Crowdfunding Platform.

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