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Possible tax concessions for companies that missed IPO

13 Feb 2022

  • Companies that filed but could not go public request concession
  • Finance Ministry likely to approve request
By Imesh Ranasinghe  The Finance Ministry is considering granting a 50% tax concession for companies that had applied for Initial Public Offerings (IPOs) with the Colombo Stock Exchange (CSE) but could not go public before the 31 December 2021 deadline, even though the concession in question ended last year.  Speaking to The Sunday Morning Business, Ministry of Finance Secretary S.R. Attygalle said that some of the companies that had lodged with the CSE and could not go public before the deadline had requested tax concessions. “Some companies had problems because they could not go public before the deadline due to various issues even though they had lodged with the CSE. We can consider giving them the tax concession,” he said. The 2021 Budget proposed a 50% tax concession for the years 2021/2022 for companies that secured a listing on the CSE before 31 December 2021 and to maintain a corporate tax rate of 14% for the subsequent three years of these opting entities. This resulted in the CSE witnessing a record Rs. 124 billion 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.  In December 2021, an official of CSE told The Sunday Morning Business that they had requested the Finance Ministry to grant an extension for the deadline to encourage more companies to go public. However, Attygalle said that he could not recall a request being made by the CSE for the extension of the deadline. The IPO tax concessions was enacted through the Inland Revenue (Amendment) Bill which was passed in Parliament in May 2021, which only gave companies a short period of seven months to go public in order to enjoy the concessions.


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