State revenue enhancement measures unveiled
View(s):With several public and private sector establishments coming to a near standstill during COVID-19, the government has taken several revenue enhancement measures to achieve an income of around 9.5 per cent of GDP in 2021, according to a Finance Ministry fiscal strategy report.
To complement such a strategy, several measures have already been taken to address the concerns in revenue collection which is estimated to increase to Rs. 1.65 trillion in 2021 from around Rs.1.36 trillion this year.
Revenue enhancement has been accompanied by a comprehensive strategy that interlinks tax policy reforms and revenue administration reforms, which have been dealt with by the Treasury effectively, a senior official said.
This includes combining several tax instruments (e.g. increasing the PAL rate and removing the NBT rate), simplification of the system of taxation by reducing the number of taxes to be paid such as NBT, PAYE and WHT.
Further, capacity enhancing measures in revenue administration have already commenced including the establishment of the Large Tax Payers Unit (LTU) at the Inland Revenue Department (IRD), and the introduction of risk-based audits.
The Integrated Treasury Management Information System (ITMIS) at the Treasury has commenced roll outs in 45 entities and it is expected to further expand to about 200 entities. The tax buoyancy is expected to be improved in the medium term.
The government has introduced measures such as an electronic tax filing system which makes it easier to pay taxes. Several taxes were removed to simplify the tax structure: Economic Service Charge (ESC), Debt Repayment Levy (DRL) and Nation Building Tax (NBT) removed.
The standard Corporate Income Tax (CIT) rate structure was reduced to 24 per cent from 28 per cent. The concessionary rate of 14 per cent is applicable to the income from export of goods, tourism, education, healthcare, construction and agro-processing and 18 per cent applicable on income from manufacturing.
The high tax rate of 40 per cent continued to be applied on liquor, tobacco and betting and gaming, budget estimates showed. (BS)