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Mangala says new IR law will come into effect in 2 phases
The new Inland Revenue (IR) Bill was approved by Parliament on Thursday, with more than 200 amendments introduced to the draft legislation during the Third Reading of the Bill.
Finance and Mass Media Minister Mangala Samaraweera said the proposed Law will come into effect in two phases, with the provisions relating to income taxes effective from October 30, while the legislation will be fully implemented from April 1, 2018.
He said the new IR legislation will ease the burden of indirect Taxes that is now heaped on citizens, by increasing the number of people who pay direct Taxes to the State.
He said the lopsided taxation system that was taxing the poor, on the same level as those who are among the wealthiest in the country, would be reversed once the proposed Law comes into operation.
“The IR Dept, Customs Dept and the Excise Dept too, would be upgraded next year, to reap the full benefits of the new Law,” he said.
The Minister also said the Govt intends to introduce ‘a Universal Tax File Number (TFN)’ to every citizen over 18 years. “This, in no way, means every citizen over 18 years has to pay Income Tax. If you have no income, you can mention that, but otherwise having the TFN would entitle adult citizens to a number of privileges,” he said.
Minister of Development Strategies and International Trade Malik Samarawickrama participating in the debate, said that, the new Law simplifies the taxing process and will create a hassle free system for taxpayers, while increasing the Tax base and enhancing govt revenue collection.
Minister Samarawickrema said that Sri Lanka’s economy has transited from a low income country to a middle income level but, as in the case of many legislative enactments, Laws have remained outdated and the IR Act itself had become very complex, difficult to understand and confusing. “It has also created loopholes and opportunities for many to escape the Tax net and thereby, creating a very unfair playing field,” he said.
He added that, as a result, Sri Lanka has lagged its peers in ‘Ease of Doing Business’ in view of the existence of a very complex Tax Law. “Both local and foreign businesses find the IR Act a serious impediment that requires immediate change. The new IR Bill looks at the issue of taxation from a novel and modern perspective and meets the current status of our economy. It is simple, easy to understand and encourages compliance by all rational taxpayers,” he added.
JVP MP Sunil Handunnetti speaking at the debate said, the new Law is designed to collect Tax from every citizen of the country and entails the collection of Tax from the areas which were previously Tax free.
“This Bill has proposals to impose a Tax on the dowry, on transfer of assets from parents to children. If someone gets a donation or a gift from the President’s Fund, that money also would be taxed. The writers who publish a book are taxed, drama producers, singers and such artistes would be taxed,” he said.