COPF questions Inland Revenue Dept. on a wide range of subjects

The Inland Revenue Department (IRD) has been able to collect only 10 percent of taxes due from the eight million strong workforce, it was revealed during a probe conducted by the Committee on Public Finance of Parliament.

This was revealed during a COPE probe on IRD at the parliamentary complex on Tuesday (18), parliament sources said.

The COPF chaired by Dr. Harsha de Silva summoned to discuss the Inland Revenue (Amendment) Bill to amend the Inland Revenue Act, No. 24 of 2017.

The issue that IRD has only been able to collect taxes from 800,000 when there are approximately 8 million in the workforce came up when the Committee took into consideration the proposal that PIT (Personal Income Tax) relief to be increased from Rs. 1,200,000 per annum to Rs. 1,800,000 per annum under the Bill.

The Bill while proposing PIT relief be increased from Rs. 1,200,000 per annum to Rs. 1,800,000 per annum, also Income Tax rate on betting and gaming, tobacco and liquor industries to be increased from 40% to 45%.

Furthermore, export of services will be liable for income tax at the rate of 15% and proposals have also been made that Withholding Tax (WHT) rate on interest to be increased from 5% to 10%.

Considering PAYE data analysis in-depth, the COPF concluded that there is an error in the existing data. Accordingly, the Committee Chair directed the officials to provide an accurate data analysis to the Committee.

Moreover, it was also disclosed at the Committee on Public Finance that the implementation of obtaining a Taxpayer Identification Number (TIN) while being essential for paying taxes / importing/exporting or obtaining any services from the Inland Revenue, is not functioning. The Committee instructed the officials present to update the Committee on the status regarding the smooth execution of the process.

Considering the proposal on Income Tax rate on betting and gaming, tobacco and liquor industries to be increased from 40% to 45% the Committee expressed its dissatisfaction over the failure of the Ministry to duly establish a casino regulator. Furthermore, the Committee Chair also expressed its dissatisfaction given that the Inland Revenue Department had failed to provide proper data requested by the Committee previously on the revenue received from Casino operations of the last five years.

The Committee also questioned official present regarding having to pay 25% against a tax appeal. The Committee questioned if it is ethical to demand a cash deposit instead of a bank guarantee when making an appeal.This meeting was attended by Deputy Minister Dr Harshana Suriyapperuma along with MPs Ravi Karunanayake, Wijesiri Basnayake, Nimal Palihena.