By: Staff Writer
May 28, Colombo (LNW): Sri Lanka will start collecting movable and immovable property details in view of introducing a nation-wide property tax and a gift and inheritance tax with minimal exemptions, according to a deal reached with the International Monetary Fund and the government.
Sri Lanka has promised to “introduce a nationwide real property tax including a review of related fiscal transfers, requesting technical assistance as needed,” IMF program documents said.
Sri Lanka is trying to raise taxes to maintain a large public service and cabinet, under revenue based fiscal consolidation. Under revenue based fiscal consolidation in a previous program, spending to GDP went up from 17 to around 19 percent of GDP
State Minister of Finance Ranjith Siyambalapitiya has clarified that the recent gazette issued by President Ranil Wickremesinghe, mandating the disclosure of movable and immovable property details to the Inland Revenue Department (IRD) from 1 July, does not introduce new laws. Instead, it reinstates an existing, previously inactive law.
Speaking to the media, Siyambalapitiya stressed that this measure is an exercise of the Government’s right to obtain necessary information for revenue purposes and will not be retroactively enforced to affect past transactions.
The State Minister explained that the implementation of the gazette notification issued on 21 March was formally announced by the Inland Revenue Commissioner on 21 May.
Starting 1 July, relevant institutions such as the Land Registry Department, Company Registry Department, Stock Market, Bank and Non-Bank Financial Institutions, and Motor Transport Department are required to provide property details to the IRD.
He said the move is seen as part of broader efforts to reform the country’s tax system and improve Government revenue without imposing undue burdens on the citizens.
Siyambalapitiya pointed out that the non-implementation of such regulations has contributed to Sri Lanka’s status as one of the countries with the lowest Government revenue globally, leading to severe economic challenges.
He highlighted that only 20% of the country’s tax revenue comes from direct taxes, while a significant 80% is derived from indirect taxes, disproportionately affecting the general population.
Sri Lanka is trying to raise taxes to maintain a large public service and cabinet, under revenue based fiscal consolidation. Under revenue based fiscal consolidation in a previous program, spending to GDP went up from 17 to around 19 percent of GDP
Siyambalapitiya pointed out that the non-implementation of such regulations has contributed to Sri Lanka’s status as one of the countries with the lowest Government revenue globally, leading to severe economic challenges.
Assuring the public, the State Minister stated: “At a time when society is oppressed, there is no intention to go back to the past and look for information and implement these laws to oppress the people further.”
