Friday, November 17, 2006

Budget '07 - At a Glance

"Insurance companies set off their losses from life insurance from the profits from general insurance and these two operations are to be treated as separate entities for taxation purposes

*Companies are urged to pay dividends of 50 percent from their profit and any company which pays out a dividend of less than 1/3 will be taxed 15 percent for the differences between such 1/3 and the dividend paid out.

*Passport fee has been reduced to Rs.3,500 to Rs.2500 and the fee charged for Sri Lankans living abroad applying for dual citizenship is reduced from Rs.400,000 per family to Rs.200,000, provided a fixed deposit in foreign currency of 25,000 US dollars is made at a local bank.

*Tourists Visiting the country will have to pay a Visa fee of 10 US Dollars at the time of purchasing the air ticket and penalties for violation of Visa regulations will be increased/

*Small and Medium entrepreneurs in the business sector who face difficulties and had defaulted tax for the past 5 years will be given a waiver of all penalties and given a period of 3 years to pay the arrears of tax.

*Motor vehicles ' a tax of 2.5 percent levy inclusive of all taxes and duties paid at the point of Customs.

*Income earned on interests is taxed at 10 percent from such earnings above Rs.108,000 it is to be raised to amount above Rs.300,000 and the withholding tax is reduced to 5 percent as an incentive for savings. Only if the earnings from interests is above 600,000 the tax will be 10 percent.

*Retiring employees who had completed 20 years of service will be given the benefit of an exemption of tax up to Rs.2 million for terminal benefits.

*The tax for shares of employees of companies

*Import of buses exempted from VAT

*VAT exempted for projects to build houses for shanty dwellers.

*Tax reduction to 5 percent for imports of high tech medical equipment.

*Environmentally harmful polythene 5 percent Excise tax.

*Construction industry to receive depreciation on machinery allowance up to 25 percent. Now it stands at 12.5 percent.

*Tax exempted on heavy fuel, furnace oil and electricity and machinery imported by the CEB will be also be exempted from tax.

*Local film industry given a reduced VAT of 5 percent for imports of items needed for film production.

*Ten year tax holiday for newly constructed cinemas.

*Economic service charge for tea, rubber and coconut processing industries reduced to 0.25 percent and VAT and customs duty exemption for machinery imported for these industries.

*Prawn farming, livestock, SME sector given duty exemption for imports of machinery. These include the jewellery export industry."

(Via Lankanewspapers)

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