Unit trusts to be given some tax concessions
Unit Trusts are confident of some tax concessions following a meeting that the Securities and Exchange Commission (SEC) and the Colombo Stock Exchange (CSE) had with the Treasury recently, sources said.
Both SEC and CSE senior officials had met with the Treasury and submitted a paper on the related tax concessions that they proposed. The Treasury has forwarded these representations to the Prime Minister, sources said. The Budget 2017 proposes a withholding tax of 5 per cent for individuals investing in bank deposits while unit trusts would be subject to a 14 per cent withholding tax. Similar tax differentials proposed at various levels will create an unequal playing field and ultimately could lead to the decline of an industry that is established globally to improve investment opportunities to retail investors and enhance financial market efficiency, the sources added. “The Treasury has now recognised these issues,” an industry player said.
Representations were made by the Unit Trust Association to the Treasury earlier which said that the impact of the new taxes could be quantified as at around Rs. 120 billion in likely withdrawals from the unit trust funds leading to a run on the funds which will ultimately have a cascading effect throughout the banking and capital market.
Over the years corporates who were using unit trust investments to forgo taxes on investment income and the Treasury was concerned about this, sources said. They said that concessions will be granted targeting individuals.