Buddhipala was speaking on a panel at the Ramada o January 22. The panel followed a presentation on the deferred tax implications of the new Inland Revenue act by Audit Partner KPMG Shameel Nayan and Director Tax and Regulation KPMG Hasna Hassan. Head of Finance Rocell Haresh Somashantha and Principal Tax and Regulatory Suresh Perera were also on the panel. Buddhipala said “We are adjusting to the moratorium. We need to look at certain things in terms of recovery. The repayments of loans are to be stopped in manufacturing industries. For that what you need to have is some kind of other support. Otherwise, you will be out of capital. We will have to go for a moratorium. This is a kind of medicine.”
Perera said the proposed tax rates by the current government would become law after they are passed in parliament.
He said that the rates had been presented to the public by way of a circular by the IRD.
Buddhipala said, “The issue is the impact. Before implementing this tax or otherwise we need to do some focused stress testing even if we don’t have the data.”
Hassan said that the accounting professionals were somewhat concerned by the changes to the law. “In other countries, before the act comes into place they do the impact assessment.”
Perera added “Because of provisions of the new inland revenue act in relation to stocks there could be deferred tax. I don’t know how many of us have realized that.”
“We had some good news yesterday. According to the new document by the ministry of finance, the highest rate of 40 percent will be 28 percent. For SME the rate of 28 percent will go to 24 percent and manufacturing to 18 percent.
Somashantha said, “We have a lot of manufacturing companies. You need to give concessions to expand business. In 1993 Sri Lanka produced half what India does. Today India produces a hundred times that. In India, they are giving incentives to the industry.”