Sri Lankan shares end marginally higher; block deals boost turnover

Reuters: Sri Lankan shares ended with modest gains on Tuesday as local investors picked up beverage and trading shares, while block deals boosted the turnover to more than a two-month high.

The Colombo stock index ended 0.08 percent firmer at 6,377.38.

The Colombo stock index fell 0.2 percent last week, its eighth straight weekly drop.


Top mobile phone operator Dialog Axiata after market hours said that it acquired 80.34 percent of Colombo Trust Finance for 1.072 billion rupees ($7 million).

Turnover was 2.03 billion rupees ($13.29 million), the highest since June 23 and well above this year’s daily average of around 863.5 million rupees.

“It was a good day and even as the market ended nearly flat, there were a lot of crossings,” said Dimantha Mathew, head of research, First Capital Holdings.

“The good sign is the buying interest from the local side that was lacking for a while was seen today even though the foreigners were net sellers.”

Shares in Dialog Axiata Plc rose 0.9 percent and conglomerate John Keells Holdings Plc ended 0.06 percent firmer.

Shares of Singer Sri Lanka Plc rose 18.2 percent while Ceylon Cold Stores Plc ended 3.2 percent firmer and Ceylon Tobacco Co Plc gained 1 percent.

Foreign investors net sold 155.6 million rupees worth of shares on Tuesday. But they have been net buyers of 27.7 billion rupees worth equities so far this year. 

($1 = 152.8000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Vyas Mohan)

Sri Lanka insurance firms face higher tax bill under new law

ECONOMYNEXT – Sri Lankan insurance companies are likely to face higher tax expenses under a new tax law that was passed by parliament last week, experts said.

Insurance firms which till now paid tax on investment income minus expenditure, will in future be taxed their profits, said Shamila Jayasekera, Partner-Tax at KPMG.

“You are also liable to pay tax on the surplus transferred to shareholders and to policy holders,” she told a forum on the new Inland Revenue Act organized by the Ceylon Chamber of Commerce.

But policyholders will be taxed at the concessionary rate of 14% for the first three years.

“It is possible some insurance companies did not pay tax now because they only pay tax on investment income minus expenses. So for most it was a loss,” Jayasekera said.

In future, most insurance firms will definitely have to pay tax although they will also be entitled to claim any loss.

There are also changes in the basis of deducting losses under the new Act.

Under the old law, losses from life insurance businesses, as well as leasing, could be set off only against the profit and income from such businesses

The new tax law allows full deduction of business losses and then there is no income tax liability but with the limitation that any balance can be carried forward only to six years unlike indefinitely previously, said Sulaiman Nisthar, Partner at Ernst & Young.