Wednesday 29 October 2014

Tax incentives failing

By Mario Andree
Ceylon Finance Today: A senior tax expert highlighting several tax benefits given to promote more foreign direct investment, questioned the tax structure and asked why major multinationals did not enter Sri Lanka.

President Mahinda Rajapaksa through Budget 2015 presented to Parliament last week announced several tax incentives for foreign direct investment and extended deadlines for completion.

Senior partner Gajma and Company N. R. Gajendran highlighting the tax incentives questioned why major multinationals have not eyed Sri Lanka as a favourable investment destination.

According to him some tax benefits granted by the Ministry of Investment Promotion and Board of Investment, extended beyond the term of the project, which did not make any sense.

Further, though the government had claimed that major companies were eyeing Sri Lanka for investment opportunities, the actual large scale multinationals had not shown an interest, he said.

According to Minister of Investment Promotion Lakshman Yapa Abeywardena the land law was creating more difficulties for his ministry to attract foreign investment.


He said that both local and foreign investors were disgusted with the government's decision to restrict holding and purchase of land by foreigners in the country.

Sri Lanka during the first three quarters of this year had received more than US$ 1.36 billion through foreign direct investment, despite failing to achieve the target during the last two years.

Minister of Investment Promotion Lakshman Yapa Abeywardena highlighting the challenges said, that despite drawbacks, the country was attracting major multinationals.

Sri Lanka failed to achieve FDI targets, falling short of US$ 160 million in 2012 and US$ 610 million 2013 to achieve US$ 1.5 billion and US$ 2 billion respectively.

However, Minister Abeywardena claimed that the country would be able to achieve this year's revised FDI target, with some major international firms entering the country.

Strength (IFS) Rating of 'B' on RWN.
"The one-notch downgrade of AAIP's national ratings follows the significant deterioration of its ultimate parent Softlogic Holdings Plc's (SHL; BBB-(lka)/RWN) credit profile which is reflected by SHL's two-notch downgrade on 2 October 2014.
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