Govt grants relief to COVID-19 hit marketing communications industry with double tax deduction

The MarCom Collective – an association that came together with the onset of COVID-19 to propose relief measures for Sri Lanka’s marketing communications industry – welcomed the government’s move to introduce double tax deduction for advertising and other related expenses. The proposed tax relief has been cleared by the Cabinet, gazetted and is to be presented to the Parliament for approvals.

The MarCom Collective had put forward several recommendations for the government’s consideration, with double tax deduction being one of the key proposals amongst them. The Collective will continue to engage with the government and all other relevant stakeholders to seek relief for the Rs. 151 billion marketing communications industry which makes a significant contribution to the economy, including providing direct employment to over 100,000 Sri Lankans.

Tharaka Ranwala, President of the International Advertising Association (IAA) – Sri Lanka Chapter said, “After engaging all stakeholders for over a year, we are extremely pleased that the government has been receptive to our proposals. The relief granted by the government must be responsibly used by companies for the benefit of brands and any form of misuse could only jeopardize ongoing efforts by the MarCom Collective to develop the industry with the assistance of the government.” The IAA is an association which represents clients, media, and the agencies.

With effect from the 01st of April 2021 the draft law by the introduction of a new Section (Section 15A) has been worded to provide clarity on the deductibility of expenses incurred in marketing and communication, such that all marketing and communication expenses incurred by a business has been defined and would be allowed to be deducted against the income. i.e. the wording of the law has removed the inconsistency which arose as a result of not being able to deduct the expenses of a capital nature, by specifically allowing such expenditure even if capital in nature.