June 29, 2010 (LBO) - Sri Lanka has a complex tax structure which is discouraging savings and the government is expecting a comprehensive tax reform plan in August, deputy finance minister Sarath Amunugama said.
An interim report from a presidential tax commission has recommended a simplified tax structure which is more equitable and is being planned for the medium term, Amunugama said.
Taxes on cars and some imports have already been cut on interim recommendations, he said.
Amunugama said different tax treatments of firms coming under the Board of Investment, the investment promotion agency, and other companies in the country would be reduced.
"The government also proposes in the medium term to bring down excessive tax rates on personal and corporate income as well as banking and financial institutions and do away with ad hoc and unproductive tax concessions offered by the Board of Investment and in terms of income tax laws," the budget speech said.
"The dichotomy between the BOI and non-BOI regimes will be corrected to create a level playing field."
Banks and financial sector firms were also facing very high tax rates, he said.
The government was planning to raise the tax take to 17.0 percent of gross domestic product in the medium term with tax reforms.
In 2010 the government was expecting a revenue to GDP ratio of 14.9 percent up from 14.5 percent in 2009.
source - www.lbo.lk
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