The 2021 Budget announced tax concessions to encourage listing of companies on the Colombo Stock Exchange (CSE) may not ensure a spike in new PLCs in the country, as highlighted at the Daily FT-Colombo Uni. MBAA organised forum on Friday.
The Budget proposal was a 50% tax concession for the years 2021/2022 is provided for companies that are listed before 31 December 2021 and a concessionary corporate tax rate of 14% will be provided for the subsequent three years.
It was pointed out at the forum that apart from the benefit in the first year, the concessionary 14% rate for next three years was less attractive since at present whether listed or not, exports, tourism, education, medicare, construction, and agro processing companies anyway enjoy the lowest rate of 14% at present.
The concessionary 14% rate may appeal for manufacturing sector companies currently unlisted as they pay a higher 18% rate as well as trading, banking, finance and insurance companies who pay a 24%.
Treasury Secretary S.R. Attygalle who was a special invitee at the forum on Friday emphasised that 50% concession on year one was significant whilst 14% rate for next three years was appealing for the manufacturing sector. However he indicated that the Government might revisit this issue and consider suggestions.
At present there are 285 companies listed on the CSE whilst State Minister of Money, Capital Markets and Public Enterprises Reforms Nivard Cabraal as Chief Guest told the forum on Friday that the Government would like to see the number increasing to over 500 in the medium term.
Strategic Partner of the Forum was Standard Chartered Bank, Technical Partner PwC, Capital Markets Partner SC Securities Ltd., Creative Partner Phoenix Ogilvy and Electronic Media Partner Ada Derana 24 whilst the venue host was the BMICH.
(FT)