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Cargills to ‘engage’ government over tax

19 Feb 2015 - {{hitsCtrl.values.hits}}

A leading retailer in the country said it was “engaging” the new government over the higher taxes the sector was slapped with.“If we are to contribute towards the development of the agriculture and rural sector to create sustainable jobs, the government has to revisit the VAT impacts towards organised trade,” Cargills Ceylon Deputy Chairman and Group CEO Ranjit Page said.

In the 2013 budget, VAT and the so-called Nation Building Tax (NTB) were extended to retail and wholesale trade, starting with supermarkets, with a t urnover above Rs.500 million a quarter. In the 2014 budget, the VAT threshold was brought down to Rs.250 million and to Rs.100 million in the 2015 budget.

In a move to further tax the sector, t he eligibility t o claim exemption on goods, specifically exempt under the VAT law, sold by a retailer was restricted to a maximum of 25 percent of the total sales.The interim budget of the new government presented this January did not make any revisions to t he taxes on t he retail and wholesale trade.“I personally believe the state needs to revisit this as soon as possible.

It has a huge i mpact on t he agriculture community, who are our suppliers. I don’t believe that it can be put off for too long,” Page stressed.The interim results released for 3Q15 of Cargills showed the operating profits of the retail and wholesale distribution more than halving to Rs.702 million from Rs.1.6 billion, a year ago.

This was despite the revenue remaining flat at Rs.39.3 billion.“Due t o t he 25 percent cap on VAT-exempt products, your company pays taxes on consumer essentials such as rice, fruits, vegetables, dairy products, seafood, etc., with ‘deemed’ VAT having increased to as much as Rs.332.0 million for the quarter ended.

Business Main

Cargills to ‘engage’ government over tax

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