Wednesday, April 17, 2024

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SL Govt to revitalize 469,000 defunct tax files introducing tax reforms

By: Staff Writer

Colombo (LNW): The government is fully determined to revitalize tax files that became defunct due to stupid policy of the previous regime by introducing massive tax cuts and abolishing certain revenue generating taxes following its first cabinet meeting in 2019.

Individuals who open income tax accounts under a gazette notice will not be asked questions on tax returns not filed of prior years, State Minister for Finance Ranjith Siyambalapitiya said.

Sri Lanka issued a gazette requiring, doctors, lawyers and vehicle owners to open an income tax account from June 01, and anyone over 18 years from next year.

There has been a decline in Sri Lanka’s tax base between 2019 and 2020 with 33.5% decline in the number of registered taxpayers (corporate and individual) in the country. T

his decline is most probably associated with the major changes in tax policy introduced in December 2019, particularly the increase in thresholds for Value Added Tax (VAT) and the abolition of Pay As You Earn (PAYE) tax.

The Chairman of the Sectoral Oversight Committee on National Economic and Physical Plans, Mahindananda Aluthgamage said that although there are 500,000 personal income tax files in this country, only 31,000 of them are paying tax.

During the Sectoral Oversight Committee meeting held recently in parliament, he pointed out that there are 105,000 registered limited companies in the country, but 82% of the tax revenue is received from only 382 companies, the Department of Communications of the Parliament reported.

The Chairman also emphasized that it is important to maintain the inflation, the reserves of the country and the government’s income in an optimal condition by December by the time of the second review of the International Monetary Fund (IMF), given that the said factors must be taken into account when granting loans.

Therefore, the chairman said that his committee will hold regular discussions with Sri Lanka Customs, Excise Department and Inland Revenue Department to provide necessary facilities to increase the state revenue, the statement said.

Aluthgamage spoke at length about the failure of the Inland Revenue Department to collect the tax revenue and stated that the committee is making positive improvements in this regard.

There was also a discussion about the collection of Rs. 904 billion in arrears which is due to the Inland Revenue Department, it added.

Furthermore, he pointed out that discussions are being held with the Minister of Justice to amend the Inland Revenue Act.

The Inland Revenue Commissioner General stated that the tax revenue target given by the government for the year 2023 of Rs. 1.6 trillion was expected to be earned by 40% in the first 6 months and 60% in the remaining 06 months, and the target for the first 6 months has already been met.

Apart from the said, he stated that work is being done to generate expected tax revenue in the remaining 6 months. The Chair also mentioned that there is a need to establish a systematic mechanism to regulate the collection of tax revenue.

Members as well as officials pointed out that due to the fact that the data provided for the registration of companies in this country is not true and that they have to face problems in tax collection.

The Committee also discussed at length the need to establish a digital data system linking the Sri Lanka Customs Department, the Excise Department and the Inland Revenue Department as soon as possible, as well as the need to re-register the private tax file in the country, according to the statement.

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