CSE in doldrums with capital gains tax
Stock market stakeholders are deeply upset over the decision to re-impose the capital gains tax on the Colombo Stock Exchange (CSE), analysts said. Prime Minister Ranil Wickremesinghe at a recent Cabinet Committee on Economic Management meeting had decided to slap the tax despite an earlier decision not do so, following representations made by the Securities and Exchange Commission. Capital gains tax was to have been replaced with a Share Transaction Levy Capital Gains Tax is a levy on profits realised from the sale of assets. “Changing the goal posts is the worst thing for the CSE. When this happens, all investors lose faith and they adopt wait-and-see approach,” an analyst said.
He noted that the timing is also unfavourable, as this tax is being imposed at a time when the CSE has fallen considerably necessitating the enforcement of buoyant policies to heighten confidence, and let the bourse grow. Another analyst pointed out that no one has the ‘slightest clue’ on how much the incurred cost in this exercise will be. “It’s a totally complicated calculation and will definitely impact the ailing CSE negatively,” he added. He added that the decision to keep the share transactions levy rather than imposing a capital gains tax for stock markets was a good one, but it’s not comprehensible why it was reversed.