Tea exporters want taxes in 2016 budget reduced
View(s):Sri Lanka’s Tea Exporters Association (TEA) has called for a reduction of taxes imposed in the revised budget proposals and the annual license fee for all companies as part of the previous announcements. The TEA has stated that exporters were facing a grave situation in the wake of the low demand, low prices, recent oil price drops, political and economic issues in Russia and West Asia that has been further burdened by the these taxes which they want the state to reduce.
The revised budget proposals presented in Parliament on March 8, 2016 proposed to revise the Corporate Income Tax, and accordingly the applicable Tax rate on income of value added tea exports (tea in packets and bags etc) will be increased from current levels of 10 per cent and 12 per cent, applied on the extent of value addition, to a single rate of 17.5 per cent while keeping the tax on bulk tea exports (28 per cent) unchanged.
This is an increase of 75 per cent and 45.8 per cent on the two categories respectively, TEA said in a media release. The income tax rates of 10 per cent and 12 per cent were applied for export of tea bags and tea packets to encourage the export of tea in value added form. The current proposal is a deviation from the Government policy of promoting tea exports with more value addition, it said. TEA noted that the new proposal to increase the income tax on export of value added tea at this crucial moment will discourage the exporters and may reduce our share of pre-packed tea exports.
Tea exporters were concerned about the annual license fee introduced for all companies in the 2016 Government Budget from this year where private companies have to pay Rs. 60,000 + taxes; public quoted companies big, medium or small – Rs. 500,000 + taxes; and other companies Rs.100, 000+taxes. The implementation of this proposal has created an additional financial burden on tea exporters as they are already under an annual license scheme operated by the Sri Lanka Tea Board under the purview of Ministry of Plantation Industries, it was noted. Tea exporters strongly object to these budget proposals that would put additional pressure on them at a time when more relief is expected from the government, the release said.