Features

Efficient tax administration critical to generating expected revenue

Published

2 years ago

2024/02/16

By Nimali Liyanage
B.Sc. Accountancy (Sp.), FCA

The broadening of the tax net and the removal of the Value Added Tax (VAT) exemptions have had a positive impact on the economy, but the government will not earn the expected tax revenue if some basic reconciliations cannot be done by the Inland Revenue Department’s (IRD) RAMIS programme. In a country with world-class IT professionals, it is sad to note that the authorities have not been able to digitise the processes to ascertain information to ensure greater tax compliance, and efficiency in collections.

As a tax professional with over 20 years of experience working in the Big 4 in Sri Lanka and overseas, who worked in one of the largest conglomerates in Sri Lanka and led the automation of Withholding Tax (WHT) deduction at source on payment of service fees under Section 85 of the Inland Revenue Act, I would like to make my observations on some of the inefficiencies and unproductive work carried out by the IRD officials and on areas for improvement particularly regards WHT deducted at source on interest income as an example. Many such areas need attention, including VAT deferred under Section 22(7) of the VAT Act.

A) Non-compliance by the banks and financial institutions (‘withholding agent)

Although the IRD has issued guidelines on monthly withholding tax certificates and tax certificate specimens, in most instances, the taxpayers do not get the withholding tax certificates as per the IRD-prescribed format by the due dates.

In an era when withholding tax certificates can be emailed to all customers with a click of a button or can have the option to download through online banking or the banking App, banks and financial institutions require their customers to make written requests for the issuance of withholding tax certificates.

Further, it appears that several banks and financial institutions have failed to educate their officers who deal with their customers on the requirement to issue the WHT certificate to, and this leads to a waste of time visiting the banks several times to obtain the certificates and get them corrected to comply with the IRD specimen.

Furthermore, I believe banks and financial institutions do not report the WHT deducted in a format that can be matched via the RAMIS programme. I can only assume that the IRD has not set a standard format, resulting in the banks reporting them differently without realising its consequences.

B) The IRD inefficiencies add more burden on the compliant taxpayers

Once withholding tax (“WHT”) is deducted, the withholding agent must issue a WHT certificate to the customer before the end of the following month. The taxpayer claims a tax credit against tax payable based on the certificate issued. However, instead of reconciling with the withholding agent’s RAMIS records and obtaining a direct confirmation from the withholding agent, the IRD officials ask the taxpayers to liaise with the respective withholding agent and provide details such as the RAMIS schedule reference number of the taxpayer to support such credit despite the taxpayer having a valid WHT certificate.

The IRD should check whether the bank/financial institution has complied with the guidelines/provisions issued by the IRD when the taxpayer has provided a WHT certificate to support the tax credit. If the IRD cannot reconcile the credit with the taxpayer’s records, or the WHT certificate is not per the specimen, the IRD should take necessary action against the withholding agent without harassing a compliant taxpayer.

This sort of practice will waste taxpayers’ and tax officials’ time on unproductive work and cause taxpayers to spend additional money on tax consultants and lawyers to appeal, and the whole process will drag on for several years, which may, in most instances, not generate additional tax revenue.

When the withholding agent fails to deduct WHT or remit the same to the IRD, the taxpayer should not be penalised. In such instances, the IRD should recover penalties and interest from the withholding agent without burdening innocent taxpayers.

The IRD should be equipped with checks and balances to catch those who claim tax credits using bogus WHT certificates. Further, there should be a mechanism to enable taxpayers with valid WHT certificates to claim compensation from the IRD for the additional time and money spent/wasted due to the IRD’s inefficiencies.

Towards better tax administration on tax deducted at source

If the following measures are implemented, the government can earn the expected tax revenue from tax deducted at source, and the time of IRD officials can be spent on more productive work.

All the banks and financial institutions should report interest income and withholding tax deducted at source in a format that matches the taxpayers’ monthly withholding tax certificates in RAMIS.If a customer does not provide a Tax Identification Number (TIN), then a higher WHT rate should be introduced and applied to such persons, including non-residents.

The withholding agents should issue the WHT certificates proactively without waiting for the customers to make written requests, as the IRD requires the certificates to be given before the end of the following month and not annually.

WHT certificates should be issued to the customers as per the IRD guidelines and facilitated downloading them online or via the banking app, along with downloading the monthly bank statements without an additional fee.

The IRD should capture interest income and WHT deducted against each taxpayer’s TIN based on the RAMIS schedules submitted by the banks and financial institutions. For example, in Australia, taxes deducted at source on all sources of income are recorded in the Australian Tax Office Pre-filling Report, which the taxpayers can access online, and the taxpayers are not required to submit certificates or schedules.

These details are populated in the tax return automatically at the time of preparation of the tax return, and taxpayers can cross-check the accuracy of the details at the time of lodgement of their tax returns, update the details, and make comments if they are incorrect so that the tax authority can follow up with the withholding agents.

Once the IRD captures the details in a report similar to the pre-filling report, the requirement to issue a WHT certificate and furnish the WHT schedule can be removed.

Those who have earned interest income without having a TIN should be tracked, and action taken against them.

There are many such areas that the IRD needs to work on for better tax administration, such as issuing tax clearances for the repatriation of funds overseas so that the taxpayers are not reluctant to pay taxes and use proper channels to remit funds. The corrupt elements among the IRD officials discourage taxpayers from paying taxes and prevent the government from generating the expected tax revenue. The poor administrative practices at the IRD cause waste of time and money.

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Features

Maduro abduction marks dangerous aggravation of ‘world disorder’

Published

7 hours ago

2026/01/8

Sahan Weerasooriya

Venezuelan President Maduro being taken to a court in New York

The abduction of Venezuelan President Nicolas Maduro by US special forces on January 3rd and his coercive conveying to the US to stand trial over a number of allegations leveled against him by the Trump administration marks a dangerous degeneration of prevailing ‘world disorder’. While some cardinal principles in International Law have been blatantly violated by the US in the course of the operation the fallout for the world from the exceptionally sensational VVIP abduction could be grave.

Although controversial US military interventions the world over are not ‘news’ any longer, the abduction and hustling away of a head of government, seen as an enemy of the US, to stand trial on the latter soil amounts to a heavy-handed and arrogant rejection of the foundational principles of international law and order. It would seem, for instance, that the concept of national sovereignty is no longer applicable to the way in which the world’s foremost powers relate to the rest of the international community. Might is indeed right for the likes of the US and the Trump administration in particular is adamant in driving this point home to the world.

Chief spokesmen for the Trump administration have been at pains to point out that the abduction is not at variance with national security related provisions of the US Constitution. These provisions apparently bestow on the US President wide powers to protect US security and stability through courses of action that are seen as essential to further these ends but the fact is that International Law has been brazenly violated in the process in the Venezuelan case.

To be sure, this is not the first occasion on which a head of government has been abducted by US special forces in post-World War Two times and made to stand trial in the US, since such a development occurred in Panama in 1989, but the consequences for the world could be doubly grave as a result of such actions, considering the mounting ‘disorder’ confronting the world community.

Those sections opposed to the Maduro abduction in the US would do well to from now on seek ways of reconciling national security-related provisions in the US Constitution with the country’s wider international commitment to uphold international peace and law and order. No ambiguities could be permitted on this score.

While the arbitrary military action undertaken by the US to further its narrow interests at whatever cost calls for criticism, it would be only fair to point out that the US is not the only big power which has thus dangerously eroded the authority of International Law in recent times. Russia, for example, did just that when it violated the sovereignty of Ukraine by invading it two or more years ago on some nebulous, unconvincing grounds. Consequently, the Ukraine crisis too poses a grave threat to international peace.

It is relevant to mention in this connection that authoritarian rulers who hope to rule their countries in perpetuity as it were, usually end up, sooner rather than later, being a blight on their people. This is on account of the fact that they prove a major obstacle to the implementation of the democratic process which alone holds out the promise of the prgressive empowerment of the people, whereas authoritarian rulers prefer to rule with an iron fist with a fixation about self-empowerment.

Nevertheless, regime-change, wherever it may occur, is a matter for the public concerned. In a functional democracy, it is the people, and the people only, who ‘make or break’ governments. From this viewpoint, Russia and Venezuela are most lacking. But externally induced, militarily mediated change is a gross abnormality in the world or democracy, which deserves decrying.

By way of damage control, the US could take the initiative to ensure that the democratic process, read as the full empowerment of ordinary people, takes hold in Venezuela. In this manner the US could help in stemming some of the destructive fallout from its abduction operation. Any attempts by the US to take possession of the national wealth of Venezuela at this juncture are bound to earn for it the condemnation of democratic opinion the world over.

Likewise, the US needs to exert all its influence to ensure that the rights of ordinary Ukrainians are protected. It will need to ensure this while exploring ways of stopping further incursions into Ukrainian territory by Russia’s invading forces. It will need to do this in collaboration with the EU which is putting its best foot forward to end the Ukraine blood-letting.

Meanwhile, the repercussions that the Maduro abduction could have on the global South would need to be watched with some concern by the international community. Here too the EU could prove a positive influence since it is doubtful whether the UN would be enabled by the big powers to carry out the responsibilities that devolve on it with the required effectiveness.

What needs to be specifically watched is the ‘copycat effect’ that could manifest among those less democratically inclined Southern rulers who would be inspired by the Trump administration to take the law into their hands, so to speak, and act with callous disregard for the sovereign rights of their smaller and more vulnerable neighbours.

Democratic opinion the world over would need to think of systems of checks and balances that could contain such power abuse by Southern autocratic rulers in particular. The UN and democracy-supportive organizations, such as the EU, could prove suitable partners in these efforts.

All in all it is international lawlessness that needs managing effectively from now on. If President Trump carries out his threat to over-run other countries as well in the manner in which he ran rough-shod over Venezuela, there is unlikely to remain even a semblance of international order, considering that anarchy would be receiving a strong fillip from the US, ‘The World’s Mightiest Democracy’.

What is also of note is that identity politics in particularly the South would be unprecedentedly energized. The narrative that ‘the Great Satan’ is running amok would win considerable validity among the theocracies of the Middle East and set the stage for a resurgence of religious fanaticism and invigorated armed resistance to the US. The Trump administration needs to stop in its tracks and weigh the pros and cons of its current foreign policy initiatives.

Features

Pure Christmas magic and joy at British School

Published

7 hours ago

2026/01/8

Sahan Weerasooriya

Students of The British High School in Colombo in action at the fashion show

The British School in Colombo (BSC) hosted its Annual Christmas Carnival 2025, ‘Gingerbread Wonderland’, which was a huge success, with the students themseles in the spotlight, managing stalls and volunteering.

The event, organised by the Parent-Teacher Association (PTA), featured a variety of activities, including: Games and rides for all ages, Food stalls offering delicious treats, Drinks and refreshments, Trade booths showcasing local products, and Live music and entertainment.

The carnival was held at the school premises, providing a fun and festive atmosphere for students, parents, and the community to enjoy.

The halls of the BSC were filled with pure Christmas magic and joy with the students and the staff putting on a tremendous display.

Among the highlights was the dazzling fashion show with the students doing the needful, and they were very impressive.

The students themselves were eagerly looking forward to displaying their modelling technique and, I’m told, they enjoyed the moment they had to step on the ramp.

The event supported communities affected by the recent floods, with surplus proceeds going to flood-relief efforts.

Features

Glowing younger looking skin

Published

7 hours ago

2026/01/8

Sahan Weerasooriya

Hi! This week I’m giving you some beauty tips so that you could look forward to enjoying 2026 with a glowing younger looking skin.

Face wash for natural beauty

* Avocado:

Take the pulp, make a paste of it and apply on your face. Leave it on for five minutes and then wash it with normal water.

* Cucumber:

Just rub some cucumber slices on your face for 02-03 minutes to cleanse the oil naturally. Wash off with plain water.

* Buttermilk:

Apply all over your face and leave it to dry, then wash it with normal water (works for mixed to oily skin).

Face scrub for natural beauty

Take 01-02 strawberries, 02 pieces of kiwis or 02 cubes of watermelons. Mash any single fruit and apply on your face. Then massage or scrub it slowly for at least 3-5 minutes in circular motions. Then wash it thoroughly with normal or cold water. You can make use of different fruits during different seasons, and see what suits you best! Follow with a natural face mask.

Face Masks

* Papaya and Honey:

Take two pieces of papaya (peeled) and mash them to make a paste. Apply evenly on your face and leave it for 30 minutes and then wash it with cold water.

Papaya is just not a fruit but one of the best natural remedies for good health and glowing younger looking skin. It also helps in reducing pimples and scars. You can also add honey (optional) to the mixture which helps massage and makes your skin glow.

* Banana:

Put a few slices of banana, 01 teaspoon of honey (optional), in a bowl, and mash them nicely. Apply on your face, and massage it gently all over the face for at least 05 minutes. Then wash it off with normal water. For an instant glow on your face, this facemask is a great idea to try!

* Carrot:

Make a paste using 01 carrot (steamed) by mixing it with milk or honey and apply on your face and neck evenly. Let it dry for 15-20 minutes and then wash it with cold water. Carrots work really well for your skin as they have many vitamins and minerals, which give instant shine and younger-looking skin.