Out of the 27 cinemas in Colombo City, 14 cinemas are still to pay entertainment tax arrears, which are estimated to be Rs. 11 million to date, Colombo Municipal Council (CMC) Treasurer K.D Chitrapala said.
“We have sent letters to all cinema hall owners to pay their tax arrears while these 14 owners are in arrears since 2010,” he added.
The Municipal Treasurer claims that the said 14 cinema hall owners have been warned on two or three occasions to settle the tax arrears. In addition revenue officers from the CMC Treasury visit the cinemas to warn the owners to pay the taxes.
The cinema hall owners are expected to collect the 10 percent entertainment tax separately and remit that amount to the Colombo Municipal Council.
Mr. Chitrapala said cases have been filed against three cinema hall owners, out of the 14 defaulters, but pointed out that the CMC was trying its best to avoid court cases and collect the money since there would be a long delay if the matter is to be settled in courts.
“Before filing action, we make sure that warning notices are issued and the defaulters informed by telephone to settle the taxable amount. However, in practice, the cinema hall owners are collecting the entertainment tax and adding it to their income,” he said.
He further explained that the cinema hall owners offer excuses for their delays in paying taxes saying the cinema industry is deteriorating. They also say the cinemas are running at a loss since less people patronise them.
“Entertainment tax is also collected when temporary events such as musical shows are staged, in which professionals participate,” he added.
The CMC gets to know through revenue inspectors and other sources when temporary shows are staged, Mr. Mitrapala said.
He also pointed out that most Government institutions have failed to pay their rates with the arrears totalling Rs. 1.5 billion and uncollected through the last 30 years.