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Large corporates HAMMERED

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With government imposing 25 percent ‘super gains” tax on companies earning over two billion rupees in net profit, Sri Lanka’s biggest corporates, who are listed in Colombo stock market, are now facing problems.

Largest corporates in the country such as John Keells Holdings, Distilleries, Ceylon Tobacco, Carsons, Bukit Darah, Aitken Spence, Nestle, Oversea Realty, Access Engineering, Lanka IOC, Lanka Lubricants, AHPL, HHL and Tokyo may have to pay the super gain tax. On the other hand, banks and financial firms such as Commercial Bank, HNB, Sampath, Ceylinco Insurance, DFCC, Seylan, NTB, NDB, Central Finance, People’s Leasing would be among companies that may have to pay the tax.

Meanwhile, Economynext, a Sri Lankan business and financial website, also reported that guaranteed prices on milk would hurt Nestle, Coco, Lanka Milk Foods and Lamb, while Nestle and LMF would be hit by a reduction of margins on milk powder.

With Prime Minister Ranil Wickremesinghe stating on Thursday that the new government had blocked three casinos approved by the previous administration, including a $400-million project by Australian gaming mogul James Packer’s Crown Resorts Ltd and John Keells Holdings Water Front properties, shares of top conglomerate Keells fell 3.72%. 

On Friday, Packer’s Crown Casino announced that it would pull the plug on the Sri Lankan casino project following the decision by the government in Colombo to scrap tax concessions for the project. The decision was greeted with positive sentiment by various quarters of the civil society, religious circles and activists lobbying for good governance.

Dialog Axiata PLC, Sri Lanka’s largest telecommunication service provider received a hefty blow from President Maithripala Sirisena’s government with the Finance Ministry imposing heavy one-time taxes on telecom firms and direct-to-home satellite broadcasters which could bring in Rs.4.0 billion as revenue.

A one-time of 250 million rupees was imposed on mobile telephone operators while Direct-to-Home satellite television operators were subject to a one-off levy of one billion rupees. Against this backdrop, Dialog Axiata PLC will have to pay Rs.1.25 billion to the government by way of one-time taxes.

A spokesman of the government told ‘The Nation’ that the new taxes will not make a debilitating impact on the large corporates as their revenues and profits are big enough to offset the impact of newly introduced taxes. However, he admitted that heavy one time taxes with short notice can drive away new investments and businesses from Sri Lanka.

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