ACSA – SOFA – MCC Agreements TAX EXEMPTIONS questions who is the actual beneficiary!
Posted on July 16th, 2020

While ACSA was signed in August 2017, the contents of that agreement has not been made public and no one in Government appears to know either. There is a leaked SOFA agreement while MCC agreement was also published after much outcry. ACSA allows US military the use of Sri Lanka’s entry points – Airports & Ports as well as logistics and other services whenever requested, while MCC is the US Govt’s new financial cum development arm. We are told the MCC is a gift but there are a host of clauses that the GoSL is bound to make payment for. We look at the exemptions being offered to US via SOFA & MCC to ask a very simple question – what are we actually getting for signing these detrimental agreements?

The 2007 ACSA was a 8page document and valid only for 10 years. The 2017 signed ACSA was 83pages and has no expiry or review or even exit clause.

The SOFA initially signed in 1995 is under negotiation but the shocking aspects leaked by a Sunday newspaper in 2018 warrants citizens to question – who were the officials and Ministers linked to these negotiations and what the hell were they thinking to even agree to the list of shocking proposals made by the US embassy on behalf of the US Government.

This is what Sri Lanka is going to give FREE under SOFA to the US Govt

https://www.pressreader.com/sri-lanka/sunday-times-sri-lanka/20190630/281771335735923

NO RESTRICTIONS for US in CONTRACTING MATERIALS, SUPPLIES, EQUIPMENT & SERVICES (including construction) 

NO RESTRICTION to choose CONTRACTOR, SUPPLIER, SUPPLIES, EQUIPMENT or SERVICES.

CONTRACTSwill be AWARDED & ADMINISTERED according to LAWS & REGULATIONS of US Govt and not Sri Lanka.

SRI LANKA WILL NOT TAX US GOVT for

  • Acquisition of articles & services in Sri Lanka

US Dept of Defense Military & Civilian Personnel 

  • will not have to pay any tax or similar charge in Sri Lanka

US vessels & vehicles operated by US Dept of Defense shall be exempt from payment of overland transit tolls

Sri Lanka waives

  • import inspection
  • export inspection
  • waives tax on license
  • customs duties

US Contractors can

  • import into Sri Lanka any personal property
  • export out of Sri Lanka any personal property
  • Export of equipment, supplies, material, technology training or services shall be except from any license, restriction, customs duties, taxes or any charges in Sri Lanka

US Vessels and Aircrafts owned & operated by or exclusively for US Dept of Defense shall not be subject to payment of

  • Land fees
  • Port fees,
  • Pilotage charges
  • Lighterage
  • Harbour duties at facilities owned & operated by GoSL
  • Navigation fees
  • Overflight fees
  • Terminal or similar charges
  • Sri Lankan Govt cannot board or inspect US vessels or aircrafts.

For all these FREEBIES given by the GoSL, the US is agreeing to pay reasonable charges for services requested and received & rates no less favorable than those paid by the Armed Forces of Sri Lanka”

What FREEBIES is Sri Lanka giving MCC?

http://treasury.gov.lk/article/-/article-viewer-portlet/render/view/mcc-agreement-drafted-with-the-consent-of-ag

All MCC funding is FREE from payment or imposition of any existing or future TAXES, DUTIES, LEVIES, CONTRIBUTIONS or other similar charges  

MCC funding is FREE from payment of

  • Any tariffs
  • Customs duties
  • Import taxes
  • Export taxes
  • Sales tax
  • Value added tax
  • Excise Tax
  • Property transfer tax
  • Other similar charges on any goods, works, or services introduced to Sri Lanka under MCC
  • Taxes & similar charges on ownership, possession or use of any property under MCC
  • Taxes & similar charges on income, profits, or gross receipts, attributable to work performed under MCC
  • Social security taxes & similar charges on all natural or legal persons performing work under MCC
  • Where Sri Lanka has to pay MCC or MCA-Sri Lanka the amount shall be  
  • Paid in US dollars or Sri Lanka currency within 60 days
  • Failure by Sri Lanka to refund within specified time will result in interest on unpaid amount (Section 5.4)

We are no economists or accountants but surely this is a raw deal.

The US army, US DoD civilians, US contractors and their employees – we don’t know how many even are to land as part of the contingents under ACSA – SOFA – MCC and this is seriously worrying.

Moreover, the agreements that Sri Lanka is walking into allows these UNLIMITED US personnel (in uniform & civil) to be placed in all entry and exit points of Sri Lanka, they are allowed to go anywhere in Sri Lanka even carrying arms, their vessels or vehicles cannot be boarded or inspected by us, they are given a host of immunities and privileges and US law will apply. They can import and export anything which cannot be checked or taxed and any Govt charges will not apply to them.

Are we the insane party posing the questions or are these issues not important enough & we should just be happy that the world’s super power bully has been invited to Sri Lanka!

How about considering waiving all taxes from the citizens of Sri Lanka first!

Shenali D Waduge

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