By: Staff Writer

June 11, Colombo (LNW): The government will enact new tax administration act soon in addition to existing statutes clearing complications in some sections of these acts in the recovery of tax dues and imposing penalties, finance ministry sources disclosed.

The new act has been devised in accordance with the International Monetary Fund’s governance assessment. Directives. 

The existing Inland Revenue Department (IRD) Act and the Default Taxes Special Provisions Act have stipulated conditions under which company officers, including directors, CEOs, and CFOs, can be personally held liable for the company’s tax defaults.

According to the section 149 of the Inland Revenue Act No. 24 of 2017 read with sections 164,165 and 166, managers of the entities liable to pay the taxes in default of the Company, W.A. Sepalika Chandrasekara, Commissioner General of Inland Revenue Department said.

In this section manager” of an entity includes a person purporting to act as a manager of the entity and, in the case of a company, includes a director, the chief executive officer, and the chief financial officer of the company, she confirmed.

This is not a new provision Ms Changrasekera noted adding that as per section 177A of the Inland Revenue Act No 10 of 2006 read with section 178 also had provision to recover the taxes in default from principal officers of the company.

Section 164, 165 and 166 of the Inland Revenue Act No. 24 of 2017, has explained the process of the recovery, he said.

However the new tax administration act  that applies to all taxes containing  provisions that effectively deter corruption by imposing stricter penalties (including criminal charges) on habitual tax dodgers  as well as on tax officials for taking bribes or aiding tax avoidance.

The recovery proceedings commenced under the old act regarding collection of taxes will continue as the new act had not come into force, a senior official of the finance ministry disclosed.

Instead, the Commissioner General of Inland Revenue may also recover such taxes in accordance with transitional provisions.

Sri Lankans convicted of tax evasion can be liable to a fine not exceeding Rs. 10 million or imprisonment for up to two years, or to both under the Inland Revenue Act  No. 24 of 2017.

The punishment is for those who wilfully evade or try to evade the assessment, payment or collection of tax or who wilfully and fraudulently claims a refund of tax to which they are not entitled.

In order to punish  defaulters, the Inland Revenue Chief  may place a legal claim against a taxpayer’s bank accounts by issuing a bank seizure notice, requesting the bank to remit money held in the taxpayer’s bank account to the Commissioner General (CGIR) of IRD, he  added.

The CGIR could commence court proceedings to recover amounts outstanding asa last resort.

Moreover the government is contemplating to confiscate property of habitual tax defaulters if they fail to pay accumulated tax dues running up to billions of rupees within three years, informed official sources disclosed.

 The government will enact a new tax administration act soon in addition to existing statutes clearing complications in some sections of these acts in the recovery of tax dues and imposing penalties, finance ministry sources disclosed.

The new act has been devised in accordance with the International Monetary Fund’s governance assessment. Directives. 

The existing Inland Revenue Department (IRD) Act and the Default Taxes Special Provisions Act have stipulated conditions under which company officers, including directors, CEOs, and CFOs, can be personally held liable for the company’s tax defaults.

According to the section 149 of the Inland Revenue Act No. 24 of 2017 read with sections 164,165 and 166, managers of the entities liable to pay the taxes in default of the Company, W.A. Sepalika Chandrasekara, Commissioner General of Inland Revenue Department said.

In this section manager” of an entity includes a person purporting to act as a manager of the entity and, in the case of a company, includes a director, the chief executive officer, and the chief financial officer of the company, she confirmed.

This is  not a new provision Ms Changrasekera noted adding that as per section 177A of the Inland Revenue Act No 10 of 2006 read with section 178 also had provision to recover the taxes in default from principal officers of the company.

Section 164, 165 and 166 of the Inland Revenue Act No. 24 of 2017, has explained the process of the recovery, he said.

 However the new tax administration act  that applies to all taxes containing  provisions that effectively deter corruption by imposing stricter penalties (including criminal charges) on habitual tax dodgers  as well as on tax officials for taking bribes or aiding tax avoidance.

The recovery proceedings commenced under the old act regarding collection of taxes will continue as the new act had not come into force, a senior official of the finance ministry disclosed.

Instead, the Commissioner General of Inland Revenue may also recover such taxes in accordance with transitional provisions.

Sri Lankans convicted of tax evasion can be liable to a fine not exceeding Rs. 10 million or imprisonment for up to two years, or to both under the Inland Revenue Act  No. 24 of 2017.

The punishment is for those who wilfully evade or try to evade the assessment, payment or collection of tax or who wilfully and fraudulently claims a refund of tax to which they are not entitled.

In order to punish  defaulters, the Inland Revenue Chief  may place a legal claim against a taxpayer’s bank accounts by issuing a bank seizure notice, requesting the bank to remit money held in the taxpayer’s bank account to the Commissioner General (CGIR) of IRD, he added.

The CGIR could commence court proceedings to recover amounts outstanding asa last resort.

Moreover the government is contemplating to confiscate property of habitual tax defaulters if they fail to pay accumulated tax dues running up to billions of rupees within three years, informed official sources disclosed.

By: Staff Writer

June 11, Colombo (LNW): Sri Lanka‘s new company registrations including the partnership business with foreigners  have been increased considerably since 2022 up to now  even after economic crisis left deep scars among prospective entrepreneurs struggling to find access to capital, official data shows.  

The trend of increasing foreign partnership companies even during the period of recession was due to the practice of selling land and property to foreigners by interested parties taking advantage of the 2018 amendment to the Restriction on Alienation of Land Act No. 38 of 2014, several   private enterprise associations alleged.   

The companies with foreign shareholders have been registered through the company registrar with Board of Directors appointed, a senior finance ministry official said adding that both local and foreign private sector would be able to buy shares.

Foreigners holding over 49 percent shares of companies can own the freehold of any property where the individual proprietors benefit from shared facilities – this includes, apartment blocks, resort developments and condominiums

For all other properties – lands, villas, hotels – foreigners can hold a 99 year lease in their own name, or buy through a minority owned company with a local majority shareholder, he added.

1,995 new companies have been set up in in January 2024, on top of 4,500 companies registered in 2023 despite the gravest economic crisis in the country’s history, according to statistics of the company registrar department.  

The number of registration of companies has risen to 22,376 in 2023 from 17.819 in 2022 at a time where 204,100 factories have been permanently closed and 59,100 factories have been temporarily closed, department of census and statistics revealed.

The Department of Registrar of Companies is strictly monitoring the companies registered with the department to prevent operating of shadow or dud companies, Registrar General of Companies Sanjeewa Dissanayake told the Business Times.

He noted that the department has posted a revenue of over Rs 1 billion last year from company registrations and the officials keep a close tab on the process of filing annual reports and financial statements of companies.

The company registrations are being done under Sole Proprietorship, Partnership, Private Limited Company,. Public Limited Company and Company Limited Guarantee.

However he noted that he cannot comment on the breakdown of a particular category and the intentions of entrepreneurs setting up of new companies.

Vice President, of Sri Lankan Micro Small and Medium Chamber of Commerce Mahendra Perera told the Business Times that starting a new genuine business under the present economic situation was impossible.

The sustenance of new ventures cannot be guaranteed as the prospective entrepreneurs are suffering from economic hard ships, high electricity bill coupled with production costs and unbearable taxes, he said.

However he noted that new companies are coming up with foreign partnership with local proprietors aiming to earn money by selling property at high prices to foreigners making use of the ease in regulations.

He claimed that no one will form a new company except persons with hidden agenda at a time where 204,100 factories have been permanently closed and 59,100 factories (have been temporarily closed.

June 11, Colombo (LNW): The Sri Lankan Rupee after a short hiatus continued its trend of depreciation against the US Dollar today (11) in comparison to yesterday at leading commercial banks in the country.

At Peoples Bank, the buying price of the US Dollar has increased to Rs. 297.63 from Rs. 297.14, and the selling price to Rs. 307.71 from Rs. 307.20.

At Commercial Bank, the buying and selling prices of the US Dollar remain unchanged at Rs 296.58 and Rs. 306.75, respectively.

At Sampath Bank, the buying price of the US Dollar has increased to Rs. 298.50 from Rs. 298, and the selling price to Rs. 307.50 from Rs. 307.

By: Staff Writer

June 11, Colombo (LNW): Given the current favorable macroeconomic headwinds and economic resurgence, Sri Lanka’ is optimistic in finalising debt-restructuring talks now ingoing with international creditors and entering into an agreement on the US$12 billion debt re-work proposal, finance ministry official said.

The Government’s macroeconomic policy reforms are starting to bear fruit. Commendable outcomes include rapid disinflation, robust reserve accumulation, and initial signs of economic growth, while preserving stability of the financial system, he added.

Sri Lanka will be bringing its debt service levels below 30 percent of revenue. Public finances have strengthened following substantial fiscal reforms, and it is critical that this reform momentum be continued.

The debt deals being negotiated with a group of bondholders steering committee have not been provided real debt cancellation or actual write offs of debt stock,

The rescheduling agreement reached so far with bondholders by Sri Lankan authorities suggest a loan repayment moratorium for its US$ 12 billion bilateral debts until 2028.

A 30 percent haircut on dollar-denominated bonds, including international sovereign bonds among the major clauses included in the new debt restructure proposal. It was rejected during first round of talks in London.

Sri Lanka has submitted a new restructuring proposal to dollar bondholders through its adviser Lazard as the island nation seeks to complete revamping its defaulted debt, according to finance ministry official in London familiar with the negotiations with IMF.

The deals with bondholders may include contingency clauses to increase payments to them if/when the country reaches positive economic results

These contingency clauses ensure more benefits for the private creditors if the country does well, but they do not include reduced payments if there is a negative shock

The government plans to replace current US dollar denominated ISBs with new ones in the same currency.

The outstanding value of these ISBs amounts to $12.1 billion, a significant portion of the $22 billion external debt slated for restructuring.

Sri Lanka’s external debt stock stood at US$ 37.3 billion as of December 2023, bilateral debt at US$ 10.8 billion, multilateral debt at US$ 10.84 billion, and commercial loans at US$ 14.74 billion Banks have been invited to submit proposals to be considered for the role of Dealer Manager, collaborating with financial and legal advisors Lazard Frères SAS and Clifford Chance LLP.

By: Staff Writer

June 11, Colombo (LNW): India has agreed to build three Sri Lankan wind farms on islets shared by the two countries, marking a victory for New Delhi after the project was pulled away from a Chinese business.

New Delhi has long been concerned about the region’s expanding Chinese influence.This can be considered a success for India after the project was taken away from a Chinese corporation.

A Chinese company was given a $12 million project to erect wind turbines on three small islands in the Palk Strait between southern India and Sri Lanka, with money from the Asian Development Bank (ADB).

However, construction on the project on the islets of Nainativu, Analaitivu, and Delft was never started, and the project on the islets of Nainativu, Analaitivu, and Delft was ultimately cancelled.

Sri Lanka has awarded the contract to implement a solar –wind hybrid power project in three islands off the Jaffna peninsula 50 kms away from the Tamil Nadu’s coast to an Indian company U-Solar Clean Energy Solutions following its comeback to take over the task.

The relevant tender has been awarded to Indian Company although it has formally withdrawn their bid from the bidding process and later expressed willingness to take over the project, Chairman of the Sri Lanka Sustainable Energy Authority (SLSEA) Engineer Ranjith Sepala said

In a landmark collaboration, UK-based Ryse Energy, the global leader in distributed renewable energy systems with over 180,000 installations across all seven continents, and U-Solar, one of India’s fastest growing solar EPC and developers, have signed an agreement for the development of hybrid renewable energy systems, he disclosed.

He said that U-Solar Clean Energy was the only bidder for the tender and the Indian Company t was selected by the cabinet approved standing procurement committee.

Moreover India has offered to fund the US$ 12 million project with a grant and also execute it, he said adding that considering the benefits of the Indian proposal, the power and energy ministry has decided call for tender from prospective bidders of India in accordance with the $10 million grant agreement.

The selected Indian company U-solar has already provided $ 1million bid bond Chairman of SLSEA Eng Ranjith Sepala disclosed pointing out that there was no issue relating to the deal as there was only one bidder for the tender.

The cabinet meeting on December 11 last year decided to award the contract to U Solar Clean Energy Solutions (Pvt) Ltd to build hybrid recycled power plants in Delft, Nainathivu, and Analathivu suspending awarded to Sinosoar-Etechwin Joint Venture in China, to execute the same project.