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Diaglog Axiata, Sri Lanka’s largest direct foreign investor has been gravely inconvenienced from several sides through the tax proposals in the new government’s interim budget.

While the mobile telephone subscriber providing market in Sri Lanka has been very competitive, the profit margins have been narrow due to the active presence of several competitors in the Sri Lankan market.

Under such a situation, all mobile telephone service providers being greatly inconvenienced through the interim budget proposal for the 25 per cent tax on pre-paid cards to be borne by the service provider instead of the customer, is unavoidable.

This budget proposal says that the 25 per cent tax charged from the customers on reloads and paid to the government has to be borne by the particular service provider company and b not charged from the customer or subscriber.

Diaglog Axiata which has been dealt a blow from this proposal, on the other hand receives another blow through the ‘Super Gains Tax’.

Any company which has gained a profit of over Rs. 02 billion during the last financial year is liable to this ‘Super Gains Tax’. This tax system states that companies which have gained a nett profit of over Rs. 02 billion during the 2013-14 financial year has to pay 25 per cent of the profits as tax.

Hence, the developing opinion is that it is unreasonable to impose taxes on past profits but should be done aimed at the future.

Meanwhile, despite the likelihood of Dialog being able to manage the proposal to impose a one-off tax of Rs. 01 billion on satellite television channels, it is still on the fence.

If this blow too hits Dialog, then the number of assaults on the company through the interim budget would increase.

This budget proposal states, the commercial entities in Sri Lanka who have been providing direct services through satellite to over 50,000 home subscribers have failed to pay anything to the government all through these years. In the past Dialog Television has paid millions of rupees as taxes to the government. Hence, this particular tax may be aimed at television service providers who engage in telecasting activities through Indian satellite technology. While there are over 400,000 Sri Lankan subscribers to these channels broadcasting from India, these channels do not pay anything to the government.

However, since this budget proposal limits the number of subscribers as 50,000 LBN channel does not fall under this category, due to the interpretation ‘satellite television channels’ PEO TV too does not fall under this tax proposal.

Since this budget proposal states ‘expects to gain a Rs. 02 billion’, it is doubtful whether for some reason or the other Dialog Television would be included into this proposal though it has paid taxes to the government.

Accordingly, Dialog Axiata which is has brought foreign direct investment of some USD 1.7 billion and has been a prominent foreign investor in Sri Lanka has been gravely perturbed by this interim budget.

While Dialog Axiata is a subsidiary of the Axiata Group Berhad of Malaysia, www.adaderanabiz.lk learns that the parent company has drawn its attention towards this issue.

The Sri Lankan shareholders with Dialog Axiata are nearly 25,000.

There are some 9.3 million mobile telephone subscribers with Dialog Axiata there are over 400,000 viewers of Dialog Television.

There are accusations against Dialog TV that it had censored several telecasts during the last presidential election in Sri Lanka.