In welcoming budget 2021, the Securities and Exchange Commission of Sri Lanka (SEC) said that the proposed measures would deepen the capital market activity with increased access to capital for Sri Lankan corporates.
The Proposals include several measures to develop the capital market of Sri Lanka. As an incentive to promote and popularize Real Estate Investment Trusts (REITS) that was enabled by the SEC by way of its Rules published in the Gazette on 31st July 2020, the proposals state that the investments in REITS are exempted from the Capital Gains Tax and the Dividends are to be free from Income Tax. Further, the Stamp Duty is to be reduced up to 0.75%.
“The stakeholders in the industry had perceived the Stamp Duty as an impediment to the setting up of REITS in Sri Lanka and the SEC sees this proposal as a huge boost to setting up of REITS in the country,” SEC said.
In addition, to promote new listings of local companies on the Colombo Stock Exchange (CSE), the Government has put forward certain key proposals such as a 50% tax concession for the years 2021/2022 for companies that are listed before 31 December 2021.
The SEC noted the number of companies listed on the CSE has not increased during the last several years and that was seen as a reason for the lack of liquidity and relatively small size of the market. Hence, the new proposal is expected to act as an impetus for new listings.
The SEC expects that these initiatives would help to develop and build a strong capital market which could benefit both users and providers of capital. T