Editorial

Taxpayer friendly Inland Revenue Dept. urgent need

Published

1 year ago

2024/12/8

Many compliant taxpayers have expressed their frustration with the Inland Revenue Department (IRD) for insisting that the Return of Income for the year of assessment 2023/2024 be filed as an electronic return (e-return). It is perplexing why such a requirement is being enforced in a country such as ours where computer skills are woefully lacking. In many other countries the taxpayer is entitled to submit a return either electronically or by hard copy (paper). The choice should be with the taxpayer and not the IRD. In some countries, any tax refunds to individuals are inevitably delayed for those who submit manual returns compared to those who submit e-returns. This incentivises the taxpayer to embrace technology. But here, it is forced down the taxpayer’s throat.

A fundamental principle must be that tax compliance should not result in the taxpayer having to incur additional cost or physical/mental stress in fulfilling their civic obligation of paying their income tax. Many senior citizens are not computer savvy enough to navigate through complex returns or do not have access to a laptop or other paraphernalia needed to upload supporting documents. Therefore, many individual taxpayers who struggle to complete their returns by themselves are now forced to engage the services of a professional tax consultant or accountant to submit their returns. This is an additional cost that taxpayers should not be burdened with. We understand that the IRD reluctantly accepted hard copy (paper) returns from some senior citizen who insisted they could not submit an e-return.

The IRD should concentrate on getting more people liable to pay tax to do so, thus widening the tax net instead of penalizing those who settle their dues but may delay submitting their return for the above mentioned reasons. The Inland Revenue Act provides penalties for failure to file a return on time and for criminal proceedings as well as issuing default assessments where necessary. It has often been said, with good reason, that the IRD bullies people who pay their taxes and submit their returns and does little to tackle blatant evasion which is rampant.

We have been told that taxpayers who receive interest income from fixed deposits are required to enter a significant amount of information into the e-return, which is tedious and unnecessary, particularly if the taxpayer can submit or upload a certificate from the deposit taker confirming the interest received and the advance income tax deducted at source. As in other countries, it is up to the IRD and the deposit taking institutions to devise a compliant digital platform that will enable such information to be uploaded to the IRD’s Random Access Management Information System (RAMIS).

IRD invested hugely in setting up RAMIS but was unable to utilize it effectively over many years. The banks and other deposit, too, have not played their part in this because many banks are not issuing certificates to their customers that disclose all the information required by the IRD. Time was when a blanket 15 percent withholding tax (WHT) was imposed at source on interest and dividend income with no further liability thereafter. This undoubtedly imposed hardship on those not liable for income tax in obtaining notoriously slow refunds from the department and was an advantage to high income earners. Nevertheless, like PAYE (Pay As You Earn) tax, it was an easy collection method for IRD.

After the November deadline for submitting the annual return for 2023/24 passed, the IRD issued a circular extending the deadline for submitting tax returns for that year until December 7. The circular cites the difficulties taxpayers encountered last week due to the inclement weather that prevailed in the country. No mention has been made of the RAMIS system being more or less inaccessible in the days leading to the deadline, as it could not deal with too many taxpayers trying to access the system at the same time! The circular also mentions that IRD officials will offer special support until December 6, 2024, for those who visit the department for technical assistance to submit their return online. This is most welcome.

According to currently available information, about a million taxpayers are registered with the IRD. This seems insufficient, considering that more than eight million are employed, and the income threshold for paying income tax is Rs. 100,000 monthly. It will be interesting to know as to how many of the million have submitted their tax returns by the due date or will do so in the next few days and weeks. Undoubtedly, people need to be tax-compliant, but it is also necessary for the IRD to make the process easy for taxpayers to make payments and submit their annual income tax returns.

The IRD currently does not accept cheques for settling tax obligations. A taxpayer must make a direct bank transfer or settle his/her dues through a banker’s pay order. This imposes an unfair added cost on tax payers as well as the inconvenience of having to visit the bank for this purpose. This requirement clearly is intended to ensure that tax cheques do not bounce. But the department is empowered to impose penalties on those whose cheques are dishonoured. Why impose additional burdens on taxpayers accustomed to meet their obligations by writing a cheque instead of visiting a bank and paying for the issue of a banker’s pay order?

The bottom line is that the IRD must be more taxpayer friendly than it is at present. Printing platitudes like “Thank you for paying your taxes” on its stationary is just not enough. Honest taxpayers with files on record must not be bullied, as is often done at present, and burdens like the compulsory online payment requirement now imposed as well as the ‘no cheques’ rule must done away with. Also, the department must take note of the resentment of people who pay taxes long seeing those who do not getting away Scott free.

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Editorial

Cyber thefts and political battles

Published

4 hours ago

2026/04/25

Thilina Walpola

Saturday 25th April, 2026

Another scandal has come to light and made international headlines. The illegal diversion of Treasury funds amounting to USD 2.5 million, meant for bilateral debt repayment to Australia, to a third party, could not have come at a worse time. It has happened close on the heels of the launch of the National QR Payment Adoption Programme to transform Sri Lanka into a cash-lite economy. Although the two payment systems are vastly different, and risks are much lower where the QR-based payment is concerned, the fraudulent diversion of Treasury funds is likely to erode public confidence in online fund transfers, if posts being shared via social media are any indication. The digital payment scheme is the way forward for the country, and it behoves the government to take action to clear doubts being created in the minds of the public. A misinformation campaign is already underway, and it needs to be countered.

Opposition Leader Sajith Premadasa has accused government politicians of making contradictory statements about the theft of Treasury funds. As he has rightly pointed out, it is clear from their claims that the government is still at sea, and instead of getting to the bottom of the fraud, it is trying to manage the political fallout from the incident. Some of them have even gone to the extent of bashing the Opposition. They ought to study the issue properly and speak with one voice. One need not be surprised even if the government propagandists concoct a conspiracy theory that the political rivals of the JVP/NPP masterminded the diversion of Treasury funds.

What one gathers from the government politicians’ different claims is that cyber criminals gained unauthorised access to the computer system of the External Resources Department (ERD) within the Finance Ministry through emails. They altered payment instructions, redirecting the funds to unauthorised accounts. There has been no system level hacking, according to cyber security experts. It defies comprehension why the ERD officials have not been trained to handle situations of this nature, which are not uncommon in the digital space. Even ordinary people double-check account details before transferring funds. A telephone call to the Australian creditor that was to receive funds from the Sri Lanka Treasury would have helped save USD 2.5 million.

The Opposition politicians are no better. They are also making various claims that are contradictory, and some of them have betrayed their ignorance of the issue. Most of them do not seem to know the difference between the functions of the Treasury and those of the Central Bank. They are only making the public even more confused by expressing opinions and making allegations to gain political mileage. Among them are lawmakers. They ought to be educated on the duties and functions of the Finance Ministry/Treasury and the Central Bank. What they will come out with in case of a parliamentary debate being held on the Treasury payment scam is anyone’s guess.

What needs to be done now is to ensure that the illegal fund diversion is probed thoroughly and the stolen money recovered forthwith while action is taken to prevent the repetition of such incidents. Political battles will not serve the country’s interests.

Editorial

Legislature’s meek submission to overbearing Executive

Published

1 day ago

2026/04/24

Thilina Walpola

Friday 24th April, 2026

The Opposition is intensely resentful that the government has thwarted its attempt to have President Anura Kumara Dissanayake, who is also Minister of Finance, summoned before the Parliamentary Select Committee (PSC) probing the green-channelling of 323 red-flagged freight containers in the Colombo Port in January 2025. When the Opposition members of the PSC proposed that President Dissanayake be summoned, their government counterparts put the proposal to a vote and defeated it.

The Opposition’s abortive bid was not devoid of politics, but Sri Lanka Customs, which released the aforementioned containers without mandatory inspections, is under the Finance Ministry. Therefore, the Finance Minister is accountable to Parliament and must answer questions from the container PSC, as it were.

The dispute between the government and the Opposition over the container scandal has more to it than a mere political argy-bargy. It reflects a deeper constitutional issue. The Constitution requires the President to attend Parliament, but frequent politically strategic interventions by him or her dilutes the spirit of the separation of powers and strengthens the Executive’s dominance over the legislature. This practice is bad for the wellbeing of democracy. The President has used, if not misused, Articles 32 and 33 of the Constitution to dominate Parliament in this manner over the years.

The JVP, on a campaign for abolishing the Executive Presidency, played a pivotal role in introducing the 17th, 19th and 21st Amendments to the Constitution to reduce the executive powers of the President, but ensconced in power, it is now silent on its pledge to restore a parliamentary system of government.

The Opposition has claimed that President Maithripala Sirisena testified before the PSC which probed the Easter Sunday terror attacks in 2019, and therefore President Dissanayake ought to do likewise. What it has left unsaid is that President Sirisena made a statement at the 20th meeting of that PSC, held at the Presidential Secretariat, on 20 September 2019. The PSC report has referred to the event as a ‘discussion’. Sirisena, who secured the executive presidency, promising to reduce the powers vested therein, should have refrained from undermining the legislature and visited the Parliament complex to testify before the PSC, as the Minister of Defence.

The least President Dissanayake can do to avoid the public perception that he, too, is undermining the legislature is to follow the precedent created by President Sirisena. Ideally, he ought to appear before the PSC in the parliamentary complex in keeping with his government’s much-touted commitment to upholding accountability and the separation of powers. After all, when the question of summoning President Sirisena before the PSC on the Easter Sunday attacks came up, the then JVP MP Dr. Nalinda Jayatissa, who was also a PSC member, defended the rights of Parliament. He declared that the PSC had the authority to summon anyone for questioning.

Now that the government members of the container PSC have gone out of their way to defend President Dissanayake, the question is whether they can be expected to allow an impartial investigation to be conducted and help uncover anything detrimental to the interests of the President and the ruling coalition.

By scuttling the Opposition PSC members’ effort to have President Dissanayake testify before the container PSC, and undermining the legislature in the process, the JVP-NPP government has unwittingly reminded the public of its unfulfilled election pledge to introduce a new Constitution, inter alia, “abolishing the executive presidency and appointing a president without executive powers by the parliament” (A Thriving Nation: A Beautiful Life, NPP Election Manifesto, p. 109).

Editorial

Terrorism financing and terrorist assets

Published

2 days ago

2026/04/23

Sahan Weerasooriya

Thursday 23rd April, 2026

Sri Lanka has reaffirmed its commitment to strengthening its national security and countering terrorism financing with renewed focus on Targeted Financial Sanctions (TFS), according to media reports quoting the Ministry of Defence. Sri Lanka’s compliance with the implementation of the TFS is in line with UN Security Council Resolutions, we are told. The irony of the aforementioned government announcement, which has come close on the heels of the seventh anniversary of the Easter Sunday terror attacks, may not have been lost on political observers.

The targeted financial sanctions, imposed on individuals and organisations suspected of involvement in terrorism or the financing of terrorism, include freezing assets, limiting access to financial systems and preventing designated persons or entities from conducting any form of financial activity within the country. Once a designation is published through a Gazette notification, a legally binding freezing order comes into effect. This results in the immediate freezing of bank accounts and restrictions on the use, transfer, sale, or leasing of movable and immovable assets, including property, vehicles, jewellery, and other valuables.

Eliminating the scourge of terrorism financing is a prerequisite for the success of any anti-terror campaign. Hence, the focus of all operations to defeat terrorism is on following the money trail, which is a forensic investigation technique used to trace financial transactions from their origin to the final destination, uncovering corruption, money laundering, or terrorism. In the case of the Easter Sunday terror strikes, it was not difficult to find out who had funded the National Thowheed Jamaath (NTJ) terror campaign. Sri Lankan investigators and the Federal Bureau of Investigation (FBI) of the US confirmed that the Ibrahim family, two of whose members carried out suicide bomb attacks, had financed the TNJ terror project.

The JVP-NPP government has drawn criticism from its political opponents for shielding the head of the Ibrahim family, Mohamed Ibrahim, who was a JVP National List nominee in 2015. Taking exception to the release of the assets seized from the residence of a suspect in the Easter Sunday terror strikes, the Opposition politicians have called for confiscating the wealth of the Ibrahim family and using it to compensate the victims of the Easter Sunday terror attacks. Interestingly, former President Maithripala Sirisena, ex-Defence Secretary Hemasiri Fernando, former IGP Pujith Jayasundara, former State Intelligence Service Chief Nilantha Jayawardena, and ex-State National Intelligence Service Chief Sisira Mendis have paid compensation to the Easter carnage victims, as per a Supreme Court order, for their failure to prevent the terror attacks.

The offence of financing terrorism is no less serious than the act of carrying out terrorist attacks. There is reason to believe that the issue of financing the Easter Sunday terror campaign has not been probed properly. The need for a fresh investigation into this vital aspect of the carnage cannot be overstated. However, the incumbent dispensation cannot be expected to open a can of worms by ordering a probe into this issue, and therefore a future government will have to get to the bottom of it.

It must also be found out what has become of the assets of the other terrorist organisations which raised colossal amounts of funds in this country. The LTTE and the JVP carried out numerous robberies, including bank heists, and obtained protection money from many people. They also robbed money and gold jewellery from the public. There have been election promises to trace the overseas assets of former rulers, but no serious effort has been made to fulfil these pledges. Illegal assets stashed away overseas must be brought back. Curiously, no political party has pledged to trace the missing assets of the former terrorist groups.