Turnover Tax threat for tourism

Ravi K is planning to introduce BTT which was abolished long ago. This is a very dangerous tax for the businesses as well as consumers. Unlike VAT Goods will be taxed more than once. This will result in profits getting eroded for corporates and cost of living increase for the public.

http://www.ft.lk/article/497195/Turnover-Tax-threat-for-tourism

If terrorism destroyed higher growth in Sri Lanka’s tourism industry then its post-war rebound is under threat with the Yahapalana Government toying with the idea of reintroducing Turnover Tax to replace Value Added Tax.
Untitled-1First to formally voice concern over the damaging impact of the return of Turnover Tax (TT) has been the tourism sector while the rest of the private sector has voiced similar dismay.The reason the Government is considering TT is to boost revenue but most experts have warned of dire consequences given its cascading effect.
“VAT is a more efficient and equitable tax system. Return to TT isn’t the solution for loss of revenue. The Government must be pragmatic to address the fundamental problems with a country’s tax collection including the widening of the net,” experts emphasised.
The reintroduction of TT, according to them, will seriously derail the new Government’s plan to boost investments, both local and foreign, to create 1 million jobs in five years.
A highly disturbed tourism industry has submitted a sincere plea to Prime Minister Ranil Wickremesinghe to reconsider any moves to reintroduce TT. This followed an emergency meeting of the Tourist Hotels Association last week.
“Any change that will move away from VAT to perhaps a Business Turnover Tax will have serious implications on the cash flow; will have an impact on the growth of new hotels and will negatively impact FDIs coming in; will have a cascading effect and is not conducive to be applied in the context of a developing economy,” THASL has warned in its submissions to the Premier.
It was emphasised that the current tax regime is conducive to the growth of the industry and should be maintained for at least a further three years so as to ensure the sustainable growth of the industry.

THASL has said the growth of the tourism sector is a national policy objective and all stakeholders, including the hotel industry, should be supported to achieve this goal.
The levy of additional taxes will result in the hotel industry being unable to contribute as it does now to growth and would ignore national policy that considers Tourism as a focus area in the Government’s national economic agenda.
It was pointed out that while the revenue generated from indirect taxes from the formal sector within the industry amounts to approximately Rs. 10 billion, the informal sector remains unregulated. Furthermore, if additional tax burdens on the hotel sector are passed on to the customer, Sri Lanka will be unable to compete effectively within the region, which will affect arrival numbers and reduce much needed foreign exchange generation.

The Govt. will not be able to easily collect taxes with TT.
I know for sure that with VAT there will be more transparency in the taxation.

VAT allows the IR to track and penalize errant businesses both through OUTPUT TAX or INPUT TAX.

There is no way any business can avoid paying taxes and the IR has no problem collecting all the taxes in a timely manner.

With the TT there is no check except through Tax Audits and EXternal Auditors of the company.

What they are trying to do is get rid of the input tax which is a sizable chunk of taxes claimed back by most businesses from the tax payables.

They should review the maximum claimable input tax slabs and moralities so that the IR can get more revenue.

The danger of Turnover tax is that a product will be taxed over and over again since the seller will not be able to set off the input taxes.

Just think this in a consumer's perspective. If a product passes through 4 supplier / traders then finally consumer will be bearing the entire tax burden. The good will be much expensive and cost of living will be sky rocketing.

Turnover tax is outdated and is used only in a very few countries.

Hybrid wrote:The Govt. will not be able to easily collect taxes with TT.
I know for sure that with VAT there will be more transparency in the taxation.

VAT allows the IR to track and penalize errant businesses both through OUTPUT TAX or INPUT TAX.

There is no way any business can avoid paying taxes and the IR has no problem collecting all the taxes in a timely manner.

With the TT there is no check except through Tax Audits and EXternal Auditors of the company.

What they are trying to do is get rid of the input tax which is a sizable chunk of taxes claimed back by most businesses from the tax payables.

They should review the maximum claimable input tax slabs and moralities so that the IR can get more revenue.

Future123 wrote:The danger of Turnover tax is that a product will be taxed over and over again since the seller will not be able to set off the input taxes.

Just think this in a consumer's perspective. If a product passes through 4 supplier / traders then finally consumer will be bearing the entire tax burden. The good will be much expensive and cost of living will be sky rocketing.

Turnover tax is outdated and is used only in a very few countries.

Hybrid wrote:The Govt. will not be able to easily collect taxes with TT.
I know for sure that with VAT there will be more transparency in the taxation.

VAT allows the IR to track and penalize errant businesses both through OUTPUT TAX or INPUT TAX.

There is no way any business can avoid paying taxes and the IR has no problem collecting all the taxes in a timely manner.

With the TT there is no check except through Tax Audits and EXternal Auditors of the company.

What they are trying to do is get rid of the input tax which is a sizable chunk of taxes claimed back by most businesses from the tax payables.

They should review the maximum claimable input tax slabs and moralities so that the IR can get more revenue.

දැන් Super Gain Tax ඉවරද ?

Future ta problems pita problems hehe

Market lover wrote:Future ta problems pita problems hehe

It's not for me ......It's for poor consumers.......They will have to pay more and more in case if this Turnover tax is implemented. Don't you read business articles? Don't you speak to small and medium businessman and find out how they survive now? Don't you compare the prices prevailed before 8 Jan and now. Clearly you can see price increases of many goods. If this deadly taxes are introduced poor consumers will suffer more. You and me will anyway survive. Please don't be selfish and think of the poor        

Many industry specialists opposing the implementation of Turnover tax as this dangerous. Sometimes RK might reconsider imposing this. But we know he is stubborn and would do somehow even if it's harmful. We'll wait till the budget.

At leaset read this article to find out what is Turnover tax and it's impact before making silly comments.

http://www.ft.lk/article/497195/Turnover-Tax-threat-for-tourism

Future123 wrote:

Market lover wrote:Future ta problems pita problems hehe

It's not for me ......It's for poor consumers.......They will have to pay more and more in case if this Turnover tax is implemented. Don't you read business articles? Don't you speak to small and medium businessman and find out how they survive now? Don't you compare the prices prevailed before 8 Jan and now. Clearly you can see price increases of many goods. If this deadly taxes are introduced poor consumers will suffer more. You and me will anyway survive. Please don't be selfish and think of the poor        

Many industry specialists opposing the implementation of Turnover tax as this dangerous. Sometimes RK might reconsider imposing this. But we know he is stubborn and would do somehow even if it's harmful. We'll wait till the budget.

At leaset read this article to find out what is Turnover tax and it's impact before making silly comments.

http://www.ft.lk/article/497195/Turnover-Tax-threat-for-tourism