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ECONOMYNEXT – Sri Lanka’s Parliament Committee on Public Finance (COPF) has issued a directive to the Finance Ministry to impose an income tax over super gains by firms that could have possibly exploited an overnight tax on sugar last week.
Sri Lanka issued an order to raise an import tax on sugar from 25 cents to 50 rupees overnight with effect from November 4, without a type of pre-parliamentary sovereign prerogative delegated to the minister in charge.
President Ranil Wickremesinghe’s government is facing strong criticism over the way the tax was announced to 50 rupees per kilogram from 25 cents.
The tax slapped at midnight has triggered a controversy that it was done to benefit some importers, who clear sugar from ports before the tax.
“COPF issued a directive today instructing the Sri Lankan Ministry of Finance to impose income tax on companies that have made super gains due to ‘midnight gazette’,” COPF chairman and opposition legislator Harsha de Silva said in his X (Twitter) platform.
“We must compensate for lost revenue & prevent such incidents in the future,” he said.
“Based on Customs data, it was revealed that certain companies which usually import only 2,000 MT of sugar monthly, imported 10,000 MT of sugar just before the tax increase of 200-fold, from 25 cents to Rs. 50.”
“This alleged exploitation must end!”
“This kind of manipulation can’t be ignored. Specific companies allegedly exploited the system, reaping massive gains. I emphasized the importance of eliminating ‘midnight gazettes’ in line with the IMF recommendations. Let’s work together to ensure fair and just system for all,”
Sri Lanka under previous president Gotabaya Rajapaksa reduced the tax overnight in 2020 from 50 rupees to 25 cents and the mover helped one entrepreneur to exploit the system.
President Wickremesinghe this time has reversed the 2020 tax cut, in the same way – through a midnight gazette, analysts have said. (Colombo/Nov 7/2023)
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