Mar 10, 2010 (LBO) – Sri Lanka’s high income taxes is making local firms weaker against others in developing countries, while a government living beyond its means is eating up long terms funds available for private investment, analysts said. “I’m a firm believer until this country drops the tax rate to 15 percent or 20 percent this country will not grow,” Channa De Silva, director general at the Securities and Exchange Commission said.
“We are competing with the Dubai, we are competing with Singapore, and we are competing with Thailand today, so we need to have a very competitive advantage today for the businesses to grow.
“Today businesses can go to African region and to other regions and Sri Lanka is not the only place they can work in.”
Sri Lankan companies can be charged a maximum of 35 percent from profits. Singapore’s income tax rate is 17 percent this year down from 18 percent last year and 25.5 percent in 2001. Competing economies like Vietnam charge corporate taxes of 28 percent and Malaysia 27 percent.
Sri Lanka’s tax regime is complex, arbitrary and uneven across different classes of citizens. Some sections of society are given special privileges while others are taxed in multiple ways.
Under an investme