Friday Nov 15, 2024
Friday Nov 15, 2024
Thursday, 23 March 2017 00:08 - - {{hitsCtrl.values.hits}}
Cabinet yesterday approved the drafting of a new Inland Revenue Act (IRA) to broaden, simplify and modernise tax levying and collecting in Sri Lanka that would also conform to Government policy on levying Capital Gains Tax.
The Cabinet paper, which was presented by Finance Minister Ravi Karunanayake, will concentrate on simplifying the current Inland Revenue Act (IRA) to adhere to international best practices in both substance and design. It will also broaden the income tax base by removing excessive tax and incentives and thereby raise revenue, assured the Cabinet paper.
To this end Prime Minister Ranil Wickremesinghe also submitted a Cabinet paper to allow voluntary declarations though a “Voluntary Declaration Bill” that will also be drafted alongside the IRA. The Cabinet paper was also approved on Tuesday.
The new legislation also seeks to enhance the Inland Revenue Department’s administrative powers to enforce and collect taxes and reduce potential for base erosion and aggressive tax planning, it added.
“The aim is to provide certainty and confidence to taxpayers on the basis that the new tax law framework is aligned with international best practices and can be understood by taxpayers, and is a more sustainable way of encouraging foreign direct investment and supporting growth in the economy,” it said.
The new IRA has been designed and drafted to achieve the Government’s stated objective of simplifying and modernising the existing IRA. Key elements will include broadening the tax base by removing excessive tax incentives and expanding the source of income rules. Secondly, it will add new powers and strengths to clarify existing powers of the Inland Revenue Department while also protecting taxpayers.
The Cabinet paper also assures the new Act will address tax base erosion and combat tax avoidance.
The IRA will meet the timeline of the Government that has been given to the International Monetary Fund (IMF) and will conform to the policy designs announced to levy Capital Gains Tax.
“As instructed by the Cabinet Committee on Economic Management (CCEM), headed by Prime Minister Ranil Wickremesinghe, the draft was revised taking into account the comments made by auditors and the expertise of the IMF. Part one will provide for the imposition of income tax and the second part will provide for the administration of tax laws that are under the purview of the Commissioner General of the Inland Revenue.”
The legal draftsman will structure the document, which will then be sent to the Attorney General before it is eventually presented in Parliament.
