With the complexity of increasing challenge to comply with tax regulations, there is a greater increased demand to engage with expertise tax accountant / professionals. It is also identified that tax compliance as one of controlling point that measured the existence of proper internal controls with the business.
Our firm comprised with well expertise tax team providing wide range of taxation services like compliance and resolving tax disputes with tax authorities in meeting the taxation obligations and responsibilities of our clients. We also help clients to identify tax planning opportunities and providing specialized advisory services to minimize our client’s tax liabilities within the existing tax regulations and frameworks.
Our tax team provides even greater force in tax disputes and is now a recognized leader across the tax sphere, handles a mixture of direct and indirect tax advisory, transactions and litigation matters that are major features of our tax practice.
We have experienced in working with various tax matters for a diversified client based throughout our service.
Our Taxation Services include
Tax compliance refers to fulfilling all tax obligations as specified by tax laws, which consists of submitting tax returns with the stipulated period, ascertain the accuracy of the tax liability and advising assessed taxes by the due dates. As Tax consultants, we are always involving new ways to minimize tax burden through effective tax compliance and to meet financial goals within the framework of laws applicable.
In Sri Lankan system of taxation is divided into two types: One is Direct Taxes and other is Indirect Taxes.
Income Tax: Is paid by the individual taxpayers other than corporates registered in Sri Lanka on the income earned by them. These are taxed based on slabs at different rates.
Corporate Tax: Is paid by the corporates mainly companies registered under company law in Sri Lanka on the net profit that it makes from businesses. It is taxed at a specific rate as prescribed by the income tax act subject to the changes in the rates every year by the IRD.
Due date for filing Income tax return
Every Company and liable individual persons including foreign companies must file their income tax return on or before September 30 every year. Income tax act requires all companies to get their accounts audited and submit an audit report to the IRD along with the Income tax return.
Both Income and Corporate Tax is an ocean full of provisions which all persons need to comply with. Keep reading to know what those provisions are, rules that the persons need to follow.
Our tax advisory service providers rely upon their experience and expertise to provide optimal solutions to each client individually on the following areas in making needed compliances with advisory and mainly resolving disputes and queries with the IRD.
Value Added Tax (VAT): This is the main indirect tax in Sri Lanka, which is a source of revenue for government based on consumer consumption. It is charged and collected at each point in the supply chain. VAT is incorporated in the prices of domestic goods and services. Output VAT is charged from the customers from sales. This is collected and passed on to the government. Input VAT is paid by our business for any purchases that we make.
One has to carefully study and implement applicability of the area of VAT due to its complexity together with many documentations needed to be maintained under the law and it is importantly to be considered in ascertaining prices of the goods and services offered by clients mainly looking at opportunities in Suspended VAT (SVAT).
Stamp Duty. As stated in the website of IRD, Stamp Duty is charged, on every specified instrument executed, drawn or presented in Sri Lanka; executed outside Sri Lanka in relation to a property in Sri Lanka and presented in Sri Lanka, (liability arises at the time it is presented in Sri Lanka) subject to the exemptions published in the Gazette.
Tax Planning & Advisory
Tax planning involves implementing various strategies in order to minimize the amount of the taxes paid for a given period within the structure provided in the law applicable. We do involve in analyzing and planning all types of taxes imposed by the Government so that we could help our clients to save their tax pay payments on timely basis in achieving their financial goals.
Tax Administration and Disputes Resolution
Representing clients at the IRD or any other Statutory Authority on tax enquiries & audits, appeals and other such – administrative matters is also a significant aspect our practice. We focus mainly to make our client benefited from resolving disputes with tax authorities. We have a specialized team of dispute resolution covering all taxes and support clients with every aspect of their interaction with IRD from strategy through to resolution, including litigation where required. Our team have worked for the tax authorities so we have extensive knowledge of their approach to tax risk management, as well as a deep understanding of tax administration – including information powers, the penalty regime and rules for deliberate or serial tax defaulters.
According to the Transfer pricing regulations, all pricing arrangements within related parties need to be identified and disclosed. We help our clients to create a robust transfer pricing policy to protect the profit margins on related party transactions. Our methodologies will mainly address the following aspects in Transfer pricing.
- Identifying “Associated Undertakings” and the “Arm’s length price”
- Preparing and Maintaining Transfer Pricing Documentation
- Preparation and submission of Transfer Pricing Disclosure Form
Tax Due Diligence
Tax due diligence is not a solution against investment failures, it provides the relevant information and business targets to be acquired and helps to manage the associated risk. Our experience indicates that identified tax risks can have a significant impact on the market value of the target company and might constitute a crucial argument in price negotiation process. The aim of the tax due diligence is the analysis of the target’s tax treatment in respect of its consistency with IRD, legislation of the administrative courts and the instructions issued by the Ministry of Finance.
Our services in respect of tax due diligence include, in particular, analysis of the target’s tax settlements in order to identify tax risks and analysis of decisions concerning historical tax controls undertaken by relevant authorities.
Capital Gain Tax
With effect from the introduction of the New Inland Revenue Act, Tax on (Capital) Gains from realization of investment assets has been effective from 1st April 2018. Gains arising on the realization of investment assets are taxable at 10%. Although the Capital Gains Tax (CGT) is part of the Income Tax, it has to be settled and the return has to be filed within 30 days of realization of an investment asset.
CGT is a tax on gains realized on the transfer of ownership including sale, exchange, transfer, distribute, cancel, redeem, destroy, loss, expire, expropriate, or surrender of an investment asset. The only gain that should be subject to CGT will be the gain on the realization of an investment asset. Capital gain is calculated as the difference between the consideration received and the cost of the investment asset at the time of realization.
We are in the position to analyze transactions and assist in valuation of such transactions and do the requirements of the Inland Revenue Act.