Digital push won’t fix tax woes without transparency and fairness: Expert

John Keells Group Corporate Finance and Group Tax Head Nisreen Rehmanjee

• John Keells Group Corporate Finance and Group Tax Head Nisreen Rehmanjee says digitalisation of tax administration positive, but not standalone solution
• Insists systemic inefficiencies, fairness, transparency must also be addressed for effective tax reforms
• Says small group of taxpayers bears bulk of Govt. revenue, asserts need to broaden tax base
• Asserts proposed 25% prepayment for tax appeals raises fairness concerns, with no clarity on reimbursement if appeal succeeds
• Points to lack of transparency in tax law interpretations, inconsistent enforcement creating uncertainty for businesses
• States most tax revenue comes from voluntary compliance, yet compliant taxpayers face repeated audits
• Suggests publishing tax assessment outcomes could improve public confidence in fairness of enforcement
• Claims APIT system remains administratively flawed despite rate increases

By Charumini de Silva

John Keells Group PLC Corporate Finance and Group Tax Head Nisreen Rehmanjee last week said the Government’s embrace of digitalisation is a step in the right direction, but not a silver bullet.

Speaking at a panel discussion organised by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka), she opined that digitalisation alone would not solve the country’s tax challenges.

“Good governance and transparency are just as important,” she said, pointing to systemic inefficiencies that hinder the effectiveness of reforms.



She argued that if tax reforms are to be effective, they must go beyond automation and address the deeper issues of fairness, transparency, and trust. 

Recent studies show that per capita tax contributions from registered taxpayers are disproportionately high, suggesting only a small group of compliant businesses and individuals are shouldering the bulk of Government revenue. 

Without broadening the tax base, Rehmanjee warned, sustainable growth in tax revenue would remain elusive. 

She also raised concerns about proposed amendments to the Tax Appeals Commission (TAC), which would require taxpayers contesting an assessment to prepay 25% of the disputed tax amount — plus interest and penalties — before their case is even heard.

“We are talking about people who are already within the tax net. They have exercised their right to appeal, but before they are even heard by an independent body, they are required to pay,” she pointed out.

She said the lack of clarity on whether taxpayers would be reimbursed if their appeal is successful only exacerbates concerns about fairness. 

Rehmanjee stressed transparency is a critical missing piece in the country’s tax administration. Inconsistent interpretations of tax laws, limited access to official rulings, and a lack of published data on tax assessments create uncertainty for businesses. 

“Parties of the digitisation process should be publishing all interpretations of tax laws so that the taxpayers know their rights,” she urged, noting that discrepancies in tax enforcement often arise due to revenue collection targets that lack clear guidelines.

She also explained another major issue, adding that much of tax revenue comes not from formal assessments but from voluntary compliance.

“Most taxes are collected not through audits or assessments, but because businesses are paying their fair share. Yet, the same compliant taxpayers frequently find themselves subject to repeated audits and disputed claims,” she pointed out.

If tax authorities published data on the percentage of assessments ruled in favour of taxpayers at various appeal stages, she suggested that the public would have a clearer picture of how the system functions and whether enforcement is truly fair. 

Rehmanjee also highlighted inefficiencies in how tax data is utilised, citing the Advance Personal Income Tax (APIT) system as an example. 

Despite increasing APIT rates from 5% to 10% as a simple way to boost revenue, she claimed the administrative process remains flawed. 

She noted the Government’s retreat from data transparency as a broader concern. The Inland Revenue Department (IRD) previously published performance reports, but this practice ceased as the economic crisis deepened. 

“Not only are we not getting the data we should be getting, but the level of available information has actually declined,” she pointed out. 

She stressed restoring transparency is vital to rebuilding public trust in the tax system.