Revenue buoyant tax reforms

Focused tax system to achieve growth:

Sanjeevi Jayasuriya

The country is moving towards revenue buoyant, business-friendly and broad based tax reforms. The fiscal proposals for 2011 would be an enabler for Sri Lanka’s future revamp tax structure, KPMG Ford, Rhodes, Thornton and Company Partner and Tax Services Head Premila Perera said.

Rajendra Theagarajah

J Bandaranayake

“Measures indicate that we are focusing on net income concept and simpler focused tax system to achieve accelerated growth and a US $ 4,000 per capita income,” she said.

KPMG Ford, Rhodes, Thornton & Company organized a forum on ‘Fiscal Proposals 2011 - Shaping Sri Lanka’s Future’ held in Colombo yesterday.

The country needs comprehensive pension schemes to benefit the population.

The availability of more pension schemes could capture untapped savings potential. With the intended pension schemes enormous saving funds could be build up.

There is a greater urgency for funds and pension products could play vital role, Central Bank Governor Ajith Nivard Cabraal said. The action taken to further liberalize the capital account is a measure towards the overall development.

The country needs reserves and strength for a natural progression to ensure attracting investments as well as invest outside, he said.

The country should convert small businesses to large-scale business and some of these companies need to move out and conquer foreign businesses. “We need to provide conducive environment for the foreign companies to do business here.

The liberalization of capital account will extend the scope of investment setting motion to the country,” he said.

“We are encouraging the inflow of more capital for corporate debts and sufficient funds to service these transactions.

However, foreign companies need to have a satisfactory background and there will be certain boundaries for these transactions to take place” he said.

“The overall framework is encouraging companies to borrow. We need to allow funds from outside if they are low cost,” he said.

The fiscal proposals 2011 has opened new channels in the finance and banking sectors. The competitiveness among the banks would enable to harness forward remittances more productively.

The banking sector will be aiming to increase the remittance level to around 18 to 20 percent over the next five years, HNB Managing Director Rajendra Theagarajah said.

The framework will play a meaningful role in the efforts to double the entirety of the banking sector with the expected per capita income growth.

The new regime of accounting portfolio to adjust to reveal market prices will come into effect from 2012. However, more work needs to be done in this regard, he said.

The Board of Investment (BOI) will re-look at its role and would concentrate on specific sectors and portfolio for these opportunities to attract investments.

Its future focus will be large scale investments, BOI Chairman Jayampathy Bandaranayake said.

The BOI will be inline with line agencies to regulate and facilitate investments. It is necessary to ensure speedy process.