TAX NEWS - JUNE 2010

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Ceylon Tax: Ceylon Chamber welcomes simplification of tax structure

The Ceylon Chamber of Commerce (CCC) on Wednesday welcomed Tuesday's simplification of the tax system, which it has been campaigning for a long time. On Tuesday, the government announced several changes to the import tax regime with effect from June 1. These include the reduction in the number of tariff bands, reduction in import duties, and removal of the 15% surcharge on import duty and removal of taxes such as the VAT and Cess on some of the items.

The Ceylon Chamber of Commerce said in a statement that it recognizes this initiative to reduce import taxes as a first step in the simplification of the taxation system and 'applauds the government for moving in the right direction'.

"The removal of import duty on raw materials and plant and machinery is well-timed. When the country is at a new economic juncture poising itself for accelerated growth, the reduction in duty on plant and machinery will be a further encouragement for investment.

Rather than providing tax incentives and distorting the tax system the Chamber sees this as a positive step to promote investments," the statement said adding, "Similarly the reduction in raw materials will benefit the local industries. Once again instead of imposing additional taxes to protect domestic industries, removal of tariffs on raw materials will reduce cost of production for domestic industries and enhance their competitiveness."

It said the reduction in import duty on motor vehicles and on some of the consumer durables have been strongly advocated by these sectors. Lower prices will help consumers to access better quality goods.

Lower taxes will also reduce unethical practices such as smuggling and under-invoicing which also deprive the government of its legitimate revenue.

"It is reported that the government is also working towards providing anti-dumping legislation, labeling legislation, prescription of quality standards etc to improve the environment for domestic industries which are necessary to ensure the quality of goods available for local consumption and production," the chamber said.
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