The Committee on Public Finance has raised concerns over why only 800,000 individuals fall under the tax net when Sri Lanka’s workforce comprises approximately 8 million people. Officials from the Ministry of Finance, along with Deputy Minister Dr. Harshana Suriyapperuma, explained that only around 800,000 meet the income tax threshold.
Chaired by MP Dr. Harsha de Silva, the Committee convened on March 18, 2025, to discuss the Inland Revenue (Amendment) Bill. The Bill proposes increasing the Personal Income Tax (PIT) relief threshold from Rs. 1.2 million to Rs. 1.8 million per annum. Additionally, it seeks to raise the income tax rate on betting, gaming, tobacco, and liquor industries from 40% to 45%, impose a 15% income tax on the export of services, and increase the Withholding Tax (WHT) rate on interest from 5% to 10%.
During discussions, the Committee noted discrepancies in PAYE data and directed officials to provide a more accurate analysis. It was also revealed that the implementation of the Taxpayer Identification Number (TIN) system—crucial for taxation and trade-related services—has not been functioning effectively.
The Committee expressed dissatisfaction over the Ministry’s failure to establish a casino regulator and criticized the Inland Revenue Department for not providing requested data on casino revenue over the past five years. Additionally, concerns were raised over the requirement for a 25% cash deposit for tax appeals, questioning whether it is ethical to demand cash instead of a bank guarantee. Deputy Minister Suriyapperuma defended the measure, arguing that some use appeals to evade taxes.
