Tax revisions in Budget mostly negative for apparels: industry body

26 November 2015 04:03 am - 0 - {{hitsCtrl.values.hits}}

A A A

Leading apparel industry stakeholder and Brandix Lanka CEO Ashroff Omar seems to be stressing a point to Development Strategies and International Trade Minister Malik Samarawickrama during the Apparel Exporters’ Association AGM held at Jaic Hilton Tuesday evening
Pic by Pradeep Pathirana

By Chandeepa Wettasinghe
The tax revisions in the 2016 Budget are likely to have negative impacts on the apparel exports of Sri Lanka, while locals may not be able to afford locally-made garments, an apex industry body said.

“The revision of Ports and Airports levy from 5 percent to 7 percent and Nation Building Tax (NBT) from 2 percent to 4 percent will have serious impacts on our capital investment programme,” Sri Lanka Apparel Exporters’ Association Chairman Saif Jafferjee said at the organisation’s Annual General Meeting (AGM).
Around 40 percent of apparel exports consist of material imported for value addition and re-export to markets in the US and European Union (EU0. The NBT is imposed on imports utilized by businesses.

Apparel is the second largest foreign exchange earner for the country after foreign remittances, and is the leading export, accounting for 44 percent of Sri Lanka’s exports, or US $ 4.9 billion in 2014.

Finance Minister Ravi Karunanayake had raised such peripheral taxes, but had reduced corporate taxes from 28.5 percent to 15 percent, saying that reduced corporate taxes would allow private companies to invest more of its earnings into capital, boosting the country’s economic growth.

However, Jafferjee pointed out that the apparel sector was subjected to just 12.5 percent of taxes due to its status as a value-added exporter, and the overall tax increase will only result in less capital investments in an industry which has continuously invested in cutting-edge technology.

“We do understand the reasons for the revision of the tax rate in the interest of revenue collection and fiscal consolidation. However, we do see this increase in export income tax as a negative sentiment to exporters,” he further added.

He also disapproved of the duty on sale of garments, which was increased 800 percent to Rs.200 per piece.

“The industry manufactures a wide product portfolio, from socks to jackets, which have a range of economic values. Therefore, under this revised rate structure, a major part of our product portfolio in the industry will no longer be economically viable in the domestic market and will be a loss to the consumers of this country,” he said.

However, Jafferjee also praised some measures proposed in the Budget, including the revision of the land lease tax, fast-tracking imports and exports using electronic documentation, liberalizing shipping and logistics and abolition of the Exchange Control Act, which will make business easier.

He said that the apparel sector had lobbied strongly for such progressive measures.

Jafferjee said that the expansion of capacity building in economically lagging regions and the proposal to set up a wholesale and retail marketplace utilizing Rs.2.5 billion of public and private funds to showcase products made in Sri Lanka are also commendable.

However, he said that some Board of Investment and Customs regulations should be revisited to make them more business friendly, less bureaucratic and support value chains.

Order Gifts and Flowers to Sri Lanka. See Kapruka's top selling online shopping categories such as Toys, Grocery, Kids Toys, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,Astrology, Courier/Delivery, Medicine Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka

Comments - 0

Add comment
Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

Tax revisions in Budget mostly negative for apparels: industry body

Comments - 0

Add comment

RECOMMENDED

‘Spike in blast fishing’ poses renewed threats to Sri Lanka’s marine ecosystems

UDA owned land in Thalawathugoda; UDA Minister Prasanna Ranatunga under the spotlight for forceful occupation of reserved land

Loss-making SMIB faces political pressure in recovering loans

Baltimore Bridge Collapse: MV Dali, SL authorities anchored in mystery?

Has Sri Lanka become a potential hub for the illegal wildlife trade?

Spotlight on Moragahakanda Development Project Moragolla villagers lose livelihoods and down to one meal a day

Ambitious Sri Lankan jobseekers ‘trafficked into Ukraine war zones’

Most Viewed in News

Racing event tragedy leaves seven dead including eight-year-old child

Street food vendor arrested for verbally harassing foreigner

New Visa procedure implemented

Ranil Wickremesinghe caravan moves on despite barking dogs

Former MP Palitha Thewarapperuma dies from electrocution

Complaint lodged over Piumi Hansamali's possession of Gota’s Range Rover

MIRROR CRICKET

Is Chamari Athapaththu Sri Lanka’s greatest cricketer ever?

Athapaththu back atop ICC Women’s ODI Batting Rankings

Chamari Athapaththu sets big goal for T20 World Cup

How does CSK get best out of Pathirana?

TODAY'S HEADLINES

SL took minimal steps to punish officials who committed human rights abuses: US report

Iranian President’s visit Sri Lanka withstands western pressure

25 tons of solid waste disposed along Sri Pada route

Temperature rises to ‘Caution’ level

Sri Lanka secures third spot in South Asian Kurash Championship 2024

Athapaththu back atop ICC Women’s ODI Batting Rankings

Army forms committee to probe Diyatalawa Fox Hill Supercross accident

Indian cricket manager indicted for Legend Cricket League match-fixing allegations