2 June 2023 06:24 am
The government in a fresh gazette yesterday specified additional classes of persons required to register with the Inland Revenue Department (IRD), which is an attempt to broaden the country’s taxpayer base.
The gazette notification came from President Ranil Wickremesinghe as he also functions as the country’s Minister of Finance, Economic Stabilisation and National Policies.
Accordingly, effective from June 1, 2023, it is mandatory for individuals falling under 14 new categories to register with the IRD.
The categories include, practitioners registered with the Sri Lanka Medical Council, and members of Chartered Accountants of Sri Lanka, Institute of Certified Management Accountants, Institute of Engineers, Association of Professional Bankers, Institute of Architects, Institute of Quantity Surveyors, Attorneys-at-law.
Persons with registered businesses in Divisional Secretariats, vehicle owners, employees with monthly contributions (from employee and employer) of more than Rs. 20,000 to Provident Fund, and those receiving, monthly payments of Rs. 100,000 or 1,200,000 for twelve months are also expected to comply with the new requirement.
Further, with effect from 1 January 2024, those aged 18 or more as of 31 December 2023, or those who attain 18 years on or after 1 January 2024 too are expected to register.
The move was welcomed by tax experts. They believe if effectively implemented, it would result in a stronger tax system for the island nation.
“It is good and the correct move to expand the tax net by getting all those liable for paying income tax to register with IRD. Developed countries also follow the same. However, a precondition for its successful working is the full automation of the work of IRD,” senior economist and former Central Bank Deputy Governor Dr. W. A Wijewardena told Mirror Business.
He noted that the present Revenue Administration Management Information System or RAMIS that is established at IRD is not capable of tracking transactions by the groups that are to be registered with IRD.
KPMG- Principal Tax and Regulatory Suresh Perera shared that the gazette does not increase or decrease the tax liability of an individual.
“It’s a measure to ensure more individuals including more professionals would be required to register irrespective of the liability to tax. It is a measure to ensure income tax collection will improve. As per the current law under Section 177, a person who fails to register will receive a penalty not exceeding Rs.50,000,” said Perera.