1. Extension of Tax Exemption on Spare Parts and Consumables
To encourage usage of locally produced spare parts and
consumables, import duty and sales tax exemption was withdrawn on such products used
by manufacturing companies. However, tax exemption was revived on a selective basis
for the period 18th April, 1998 to 31st October, 1999 to enable export-orientated
manufacturing companies with exports exceeding 80% to reduce their cost of production.
In order to be tax exempt, the spare parts and consumables must attract more than
5% import duty and not be available locally.
It was proposed that the aforesaid tax exemption on spares and
consumables be extended until 31st December, 2000.
2. Computation of Sales Tax Payable [Section 16]
Currently, sales tax is levied on the sales value at the
rate in force at the time at which the sales tax is due. The proposed amendment to
Section 16 of the Sales Tax Act allows the sales tax to be computed on the quantity
of goods sold, used or disposed of, or imported at the rate in force at the time
at which sales tax is due. The intent of this proposed amendment is to make provision
for specific rates of sales tax rather than the current ad valorem rates.
The amendment is effective from 1st January, 2000.
3. Reduction / Abolition of Import Duty
- Fabrics, sewing machines, furniture, leather shoes and parts for
electric motor and generators.
- With a view to enhancing the competitiveness of local producers
who have been given tariff protection for more than 10 years, import duty on 305
products have been reduced or abolished with effect from 4.00 p.m. 29th October,
1999. Details of the items are provided in Appendix II.
- Food products.
- In order to keep the price of food low, import duties on a variety
of food products detailed in Appendix III were reduced or abolished with effect from
4.00 p.m. 29th October, 1999.