FTZMA says highly disappointed with efforts taken to increase corporate tax

• Shoots a strong-worded letter to President Wickremesinghe
• Says current tax rate is intolerable
• Calls for urgent attention and intervention

The free trade zone manufacturers yesterday fired a strong-worded letter to President Ranil Wickremesinghe, expressing their disappointment in the efforts taken by the government to increase the corporate tax.

The Free Trade Zone Manufacturers’ Association (FTZMA) stated that it is “highly” disappointed with the steps taken to increase the corporate tax rate to 30 percent on profit earning, at the insistence of the International Monetary Fund staff-level agreement.

“… we strongly believe this is an intolerable rate and not the concessionary rate to our exporters, who have to compete with the regional countries such as Bangladesh, Vietnam, Indonesia and Thailand, with whom the country’s exporters secure foreign markets, buyers, etc.,” the FTZMA said.

The manufacturers pointed out that the corporate tax for exporters in both India and Bangladesh is half of the standard tax rate. 

“We view this decision as a serious impact on our existing exporters and FDIs to sustain their operation in the country as well as halting reinvestments and discouraging new FDIs from viewing Sri Lanka as a prospective destination for their investments.

“… our peer countries are offering concessionary tax on exports and continuing the export promotion tax rate at a minimum level, in order to retain their export industry in the prevalent depressed world market,” the FTZMA added. Stating that it recognises the country’s new fund-supported programme that would restore macroeconomic stability and prosperity, the association urged the president to review this decision to restore the current 15 percent concessionary tax rate as an export promotion tax to protect the export industry.

It called on the president to take into account the numerous challenges faced by the export industry at present, due to the impending global recession, which in turn is impacting the entire supply chain process for the sustenance of both export earnings and employment. 

The association added that the social and political crisis in the country has also pushed the foreign buyers to shift their orders to other countries, which has led to detrimental effects in meeting the cash flow requirements to finance the working capital for the industry continuity. 

“It is our fervent hope that you would personally intervene in this matter on an urgent basis with the respective stakeholders in this decision-making process to comply with our humble request,” said the FTZMA.