BPO sector urges tax act rethink
By Ishara Gamage
Sri Lanka's frustrated IT and Business Process Outsourcing (BPO) sector stakeholders and National Chamber of Exporters (NCE) have urged the government to not to tax IT-BPO industry as suggested by the proposed Inland Revenue (IR) Act.
"If they (the government) imposed a new tax liability on this sector, the industry participants may move to another country like Bangladesh," an industry veteran said.
He also said that due to this tax policy uncertainty, Sri Lanka's HSBC BPO Centre is threatening to leave the country.
According to Central Bank, the BPO industry is an emerging sector in our export economy, making it the country's fifth largest export revenue earner (US$ 850 million) in year 2015.The industry leaders expect this number to rise to US$ 5 billion by 2022. Sri Lanka's IT-BPO industry in 2015 employed around 80,000 professionals, with a goal of reaching 200,000 by 2020. The vast majority of these jobs are based in Colombo, which was ranked 16th among outsourcing destinations globally in 2016.
The proposed Inland Revenue Act has suggested imposing a new 14% income tax liability on the BPO industry.
The BPO industry in Sri Lanka currently enjoys various tax exemptions including zero income tax liability.
Speaking exclusively to the Ceylon FT, National Chamber of Exporters (NCE) of Sri Lanka President Ramal G. Jasinghe on Friday said that they have already lobbied to the government to avoid the proposed export unfriendly tax reforms.
"We have already submitted our proposed IR Act observations to the government and at the moment they have responded positively," he said.
The NCE also lobbied the government to not remove (as suggested) existing triple tax deductions available for their Research and Development (R&D) activities, as the results might come after two-three years.
The NCE also urged the government to accelerate the completion of the steps to establish the proposed Sri Lanka Export Import Bank and also introduce a properly structured national export oriented skills development strategy. They also said that proposed removal of import as well as export cess will have a terrible disadvantage on all the local industries.
"We think, current Middle East (especially Qatar) related crisis might encourage Sri Lankans to come back to their mother country and start their own export oriented businesses. So, we need a proper skills development strategy to train them," Jasinghe said.
Sri Lanka's proposed IR Act might clash with the country's most ambitious 8 million euro, European Union (EU) funded National Export Strategy (NES), export sector stakeholders earlier told Ceylon FT.
"As Sri Lanka's main export sector chamber, we have several issues with the proposed Inland Revenue Act. Without taking the trouble to consult us they (Government) have drafted the Bill," Ramal G. Jasinghe said early July.
Meanwhile, speaking to the Ceylon FT, Export Development Board Chairperson and Chief Executive, Indira Malwatte, also said that the new Inland Revenue Act might negatively impact the country's ICT and BPO sector.
However, Sri Lanka's ambitious National Export Strategy plans to earn US$ 18 billion from exports (currently US$ 11 billion) within next three years through solid private and public sector collaboration.
Proposed crippling countrywide strike TO SAVE ECONOMY, ASSETS, NATURAL RESOURCES– D.J. RAJAKARUNA
- Harmony needed for religious freedom – Minister 2956
- CMC property taxes 2964
- Proposed tax on EPF, ETF ICEU seeks urgent meeting with Minister 2964
- Car plunges into river Two dead, three critically injured 3006
- Arson attack on schoolgirl’s house Minister promises new home 2972
- Australian gender advocate in Lanka Broderick to meet business, public leaders 2942
- Fire at Weligama textile store 2954
- Protest planned on Matale A9 Road Compensation demand for lost property 2949
- Rs 128,250,000 spent on survey Samurdhi union demands reimbursement 3030
- NEC to boost economy – President Shot in the arm for agriculture sector 2945
- Driver who killed 13 in Barcelona rampage Spanish police in manhunt 2933
- NLB, DLB back with Finance Ministry 2925
- Govt. has failed says Sampanthan Complains in letter to UNSG 2931
- New LG Draft Bill in Parliament on 24 August 2933
- Travis Sinniah appointed Navy Chief Holder of highest combat medal 3002
- Solution to ethnic issue New Constitution the only way – Mano 2929
- 18-year sentence sought for Lankan Convicted of human smuggling 2935
- SIS man on the mat Nabbed with gold at BIA 2934
- Dullas defends Wijeyadasa 2936
- Student leader Ryan remanded Surrenders to Court through lawyers 2930
- No mandate for foreign judges – Marapana 2906
- Floods, landslides cost Rs 109 B Rs 70B needed to rebuild houses – PM 2904
- China and Turkey aspiring for Greatness in the World 3377
- General Wanasinghe’s 84th birthday today 3495
- Wiggy blasts Thavarajah 3541
- Bribery and corruption pervasive malaise in Sri Lanka 3228
- Schoolboy publisher Notching up half a century in business 2937
- Spirits Nether world inhabitants visiting us 2939
- Persisting pseudo ideals 2921
- LAW OF CRIMINAL PROCEDURE 2035
- Seven countries compete 2938
- Saparamadu wins gold medal in Taiwan 3004
- Theekshana, Ranasinghe emerge champions 2935
- Doluweera and Sayuni win in chess 2937
- Singer Cup’ U-17 Division II Cricket St. Peter’s meet Galahitiyawa Central 2936
- Ronaldo nominated for FIFA player award 2940
- Halep advances 2922
- Ton-up Cook and Root give Windies hard day’s night 2925
- England power to semi finals 2932
- More Floodlights for Dambulla 3256
- Political commentary What’s next? Who’s next? 3819
- THE SHADOWS IN THE CB SCAMS 4602
- Turmeric eaten on daily basis reverses cancer Confirmed by new scientific evidence 4075
- Drivers welcome stiffer traffic fines 4807
- What the FCID have achieved since 2015 3891
- Proposed crippling countrywide strike TO SAVE ECONOMY, ASSETS, NATURAL RESOURCES– D.J. RAJAKARUNA 2805
- No taxes on EPF withdrawals– John Seneviratne 3432
- Zero support for Justice Minister within UNP – Ajith P. Perera 3481
- Recent increase in security has caused fear among Northerners – Ramanathan 2727
- Lanka should gain from OBOR - Dr. Jayasuriya 3991
- China cracks down on VPN vendors 2459
- Roaming downtime hits customers on Three in Europe 2454
- Very few girls took computing A-levels 2458
- Chatbot helps students to choose courses 2454
- Game of Thrones struck by fresh leak 2452
- Peanut allergy treatment ‘lasts up to four years’ 2457
- Anger and hatred can make us feel happy, says study 2446
- Japanese fungus spreading in UK hospitals 2450
- Plants ‘hijacked’ to make polio vaccine 2685
- Disruption is over, and Facebook won 2445
- A time of gifts Staying on 1541
- Manuka honey:The superbug killer 2471
- A time of gifts Trying to settle down 2260
- Chithral releases his latest song 1542
- Florals: A Fashion Favourite 1542
- Be a lioness not a lamb 1039
- Places to visit in Kandy 1394
- Dhothalu Oya Sandaraja Forest amidst tea estates 1520
- Understanding and Interpreting their results 1980
- Two lunar eclipses in August 1851
- Undergoing an Erashtaka period ? 1836
- Aging with Venus 1790
- Gemstones empower aura 1804
- Correlation Between Social Formation and Text 3895
- The global and local in Hong Kong cinema-part 05 3799
- Commendations or Brickbats 4442
- Why we should listen to Jane Austen in the age of Tinder 4586
- Lullaby of the Ever-Returning Love universal yet coloured by culture 4588
- A story of Palestinians without Palestine 3774
- First impressions, are they important? 3711
- Oscar nominee to perform in Sri Lanka 3702
- Healing the helpless 1857
- Winging it overseas 1843
- From the hospital to the news room 1863
- India revisited 1831
- Showers of blessings 1859
- Healing from port to port 1831
- Master gamers 1849
- The flawed beauty 1833
- The second best in Asia 1838
- Young robotics engineers 1797
- A quest to fight evil 1801
- NCT Dream 1800