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IPO tax concessions extended till 31 Dec.

27 Mar 2022

  • Cabinet approves amendments to IRD Act
  • Amendments include extensions of concessions for newly-listed companies 
  • Extension proposed due to requests from multiple companies 
  By Imesh Ranasinghe   The new amendments to the Inland Revenue Act will include the extension of the 50% tax concession given to companies going public at the Colombo Stock Exchange (CSE) between 1 January to 31 January 2022, the Inland Revenue Department (IRD) said. Speaking to The Sunday Morning Business, IRD Commissioner General H.M.W.C. Bandara said that the proposed amendments to the Inland Revenue Act No. 24 of 2017, which were approved by the Cabinet on 14 March 2022, included the extension of the concessions given to companies going public between 1 January to 31 January 2022. He said that the extension had been proposed as many parties had been requesting the concession from the CSE and the Treasury, declaring that they had been unable to go public before the 31 December 2021 deadline due to the pandemic and other issues. The Budget 2021 proposed a 50% tax concession for the years 2021/2022 for companies that listed on the CSE before 31 December 2021, and the maintenance of a corporate tax rate of 14% for the subsequent three years for these entities. Due to this move by the Finance Ministry, the CSE witnessed a record Rs. 124 billion in capital raising, after raising Rs. 105 billion in 2018. Accordingly, the capital raised was a combination of Rs. 84.4 billion via debt and Rs. 39.4 billion in equity as the CSE saw 28 new listings, including 14 debt IPOs and 13 equity IPOs. Year 2021 was good for the stock exchange as the ASPI gained by 80.5% and the S&P SL20 improved by 60.5%; market capitalisation also reached a 10-year high of 36.7% of GDP or Rs. 5.5 trillion from 19.7% in 2020 or Rs. 2.96 trillion and 34.5% in 2010 or Rs. 2.2 trillion.  Bandara said that the 50% tax concession would be granted for the financial year 2022/2023 to the new companies through the extension of the relief. In 2022, Hela Clothing and Kapruka have debuted at the CSE so far. Last month, Finance Secretary S.R. Attygalle told The Sunday Morning Business that the Ministry was considering the extension based on the requests made by many companies that had applied for Initial Public Offerings (IPOs) with the CSE but were unable to go public before the 31 December 2021 deadline.  


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