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Last Updated : 2024-04-25 14:06:00
The Government has decided to provide five-year tax exemption to the agricultural-based small and medium industry with income tax reduction from 28 % to 14%, the Ministry of Finance and Economic Affairs said in a statement.
It said this has been done to promote agricultural production in the country for exports and consumption purposes.
Accordingly, agricultural income generated especially by the small-scale entrepreneurs in the cultivation of any agricultural products such as tea, spices, coconut, rubber, paddy, fruits, vegetables, etc, to be exempted from income taxation for a period of five years.
As a measure to ease the serious hardships to small holder business operations, it is proposed to raise the threshold for the application of ESC Economic Service Charge from Rs. 12.5 million per quarter to Rs.50 million per quarter.
“These relief measures have been taken on the instruction of the President and the Minister of Finance and Economic Affairs with the intention of providing highest priority to the agricultural development," it said.
With the introduction of several changes to the tax system by the previous government, Sri Lanka’s business community particularly the small and medium entrepreneurs those engaged in professional and other services and agricultural activities have been confronted with complex taxation and heavy tax burden.
In addition to the imposition of high income taxes on wage income and other remuneration, interest and rent incomes, tax burden has also increased through high tax rates and reduction in tax free thresholds for the implementation of Value Added Tax (VAT), Nation Building Tax (NBT) Economic Services Charge (ESC), withholding taxes, etc. People are looking for a simple, broad based, low tax rates, a transparent tax system and a simplified tax administration.
Such a system of taxation is important to provide an environment conducive for doing domestic business in the SME sector, professional and other services and agricultural activities. While formulating a simple tax system takes some time, the Hon Mahinda Rajapakse, Minister of Finance and Economic Affairs, proposes at this stage to introduce some specific measures towards providing incentives that will enable SMEs and small sector business activities to revive rapidly.
Furthermore, the climate has become extremely favourable for full scale cultivation of agricultural crops in both the plantation sector as well as non-plantation agricultural activities such as paddy, grain, fruit and vegetables and as such the government has already taken measures to reduce fertilizer prices, write off interest and penalties of agricultural credits and reduce income tax rates on agricultural income by such entrepreneurs.
His Excellency the President and the Minister of Finance and Economic Affairs are in complete agreement that highest priority should be given to agricultural development and accordingly the government is of the view that every effort should be made to make use of the 2018 /19 Maha cultivation season as a new beginning to raise agricultural production in the country for exports such as tea, spices, and other exportable crops as well as for domestic food consumption and for industrial raw materials. In this context, full scale cultivation using all cultivable land and increase in agricultural productivity to get maximum yields will be incentivized.
Therefore, the following measures are proposed for implementation.
These two proposals will encourage entrepreneurs in agriculture to engage in cultivation activities and increase the supply to local processing industries and improve market supply for both export and domestic consumption. It also noted that several tea factories are operating below capacity as local production is not adequate, and therefore it is important that tea production be increased as a priority.
RR Friday, 23 November 2018 09:06 PM
Good, Very high priority and encouragement should be given to our Agricultural sector, agricultural small and medium industries, for both our local consumption and exports. Sri Lanka is an Agricultual country and all efforts should be taken to develop the sector very much as the priority sector.
Shas Friday, 23 November 2018 10:12 PM
And it will be a agricultural country for the years to come and will not develop
dumindanirmal Friday, 23 November 2018 09:08 PM
putting in the newspapers is useless, this has to be passed as a law in the parliament,
Nimal Friday, 23 November 2018 10:08 PM
Malli enna, nangi enna "atraliya mal" pipena hati balanna!!
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