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Old November 18th, 2006, 06:49 AM   #1
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Budget 2007

The Ceylon Chamber of Commerce (CCC) said yesterday it welcomed the focus given to infrastructure in this budget. The commitment made to reduce the budget deficit, thereby lowering inflation whilst sustaining growth is reassuring. Some of the notable features of the 2007 budget are:

* The effort to contain the budget deficit at 7.2% by enhancing revenue and curtailing recurrent expenditure. The revenue collections are expected to exceed the recurrent expenses leading to a marginal surplus in the current account. This means the Government will resort to borrowings only for capital expenditure.

* Targeting 7.5% GDP growth after an year (2006) of equally high growth with a projected inflation rate of 9% by the end of 2007 has to be supported by the private sector with enhanced investment and productivity.

* The emphasis on improving productivity, an issue which the Secretary to the Treasury Dr. P B Jayasundara stressed at a post budget breakfast meeting will also improve competitiveness and increase the pace at which the economy can grow without fuelling inflation.

* Expansion of bank credit at an annual rate of 22% since 2004 is overheating the economy. This could only be arrested by a higher rate of savings and investments in addition to GDP growth which is realized from productivity gains.
* Lowering the electricity tariff for industries to US$0.7cents per Kwh will enhance Sri Lanka’s competitiveness and exports.

* This Government has already embarked on massive infrastructure development projects. These include the Norochcholai coal power plant, first phase of 300 Mwh, speeding up the South Harbour development, completing the Southern Highway by 2008, commencing work on the outer ring road to connect the Kottawa end of the Southern Highway with Kadawatha under Japanese aid and Peliyagoda under local funding and the development of Galle, Hambantota and Trincomalee harbours.

* The other infrastructure development projects announced in the Budget augur well for the economy. The main plank of the CCC proposals was infrastructure development, in particular - roads, power generation and ports.

* The sectoral proposals focus on encouraging domestic value addition and upgrading the capital stock. The incentives to be provided towards this end to industries such as plantations, jewellery, leather, apparel, shipping and entrepot trading are commendable.

The Government has given long term focus to the budget by way of introducing a 10 year plan in this year’s budget. The private sector has been invited by the Government to review the first draft of the 10 year plan and make proposals for improvement.

The CCC will urge the Ministry of Finance to examine certain aspects of the Tax Proposals before amendments to the statutes are drafted. These include the need to allow as a deduction, the repayment of loans taken for capital expenditure before arriving at the distributable profits to charge deemed dividend tax. Recouping accumulated losses from current year profits is not only prudent but a requirement under the new Company’s act. This matter should also be considered in drafting the legislation on deemed dividend tax.

Another proposal that needs to be further studied to assess its impact on business is the limitation of VAT input credit to 85% of VAT payable.

The specific fiscal measures require careful study and anlaysis prior to our finalising the implications vis-à-vis the private sector and the economy. The Ceylon Chamber of Commerce will have a team of economists, accountants, tax specialists and business leaders to examine these proposals early next week.
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Old November 20th, 2006, 03:49 PM   #2
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Dual Citizenship

Can somebody answer this question?

The fee charged for dual citizenship for Sri Lankans living abroad will be reduced from Rs.400, 000 to Rs.200, 000 per family. To qualify for this a three-year fixed deposit in foreign currency to the value exceeding US$ 25,000 should be made in a bank in Sri Lanka. No fee will be charged if the value of three year fixed deposit exceeds US$ 50,000.

Does this mean that I could still pay SLR400,000 and bypass the fix deposit of US$25,000?
Or is the only way to obtain dual citizenship by paying SLR200,000 plus US$25,000 fix deposit?
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