Sri Lanka’s tax appeal committee proposed in the 2011 budget will begin functioning from tomorrow replacing the Appeals Board of the Inland Revenue Department (IRD).
This move is aimed at providing assistance to taxpayers to solve their tax problems and barring officials from giving different interpretations on taxes, said Treasury Secretary Dr. P. B..Jayasundara when he delivered the keynote address at a seminar on recent amendments to tax legislation in Colombo on Thursday.
He told a packed audience of tax officers, bankers and tax consultants that a new tax culture has now emerged motivating taxpayers for voluntary tax compliance without going after various tax consultants. The tax ratios have been reduced and the tax foundation expanded to encourage those engaged in business, investment and professional fields.
The willingness to pay taxes should be encouraged by creating a system that people can comply with. The tax administrator, the IRD, must be able to efficiently implement the tax system. The vision of the government is to implement a simple broad based tax system which is equitable. In this context, state revenue institutions, the IRD, Customs Department, Excise Department and Provincial Councils should work together towards achieving revenue targets. Officials of all these institutions have a role to play and they should not think that the simplification of taxes has deprived them of work, Dr Jayasundera said.
Discussing tax benefits given to banks, Dr. Jayasundera insisted that the banks have to think of the future and develop a long term lending market, “Sri Lankan entrepreneurs need long term loans. Through 2011 Budget proposals we have freed up at least Rs. 15 billion for long term lending and this will be kept for three years because we know that the banks also need time to build up revenue,” he said. State-owned commercial banks have been directed to set up separate units to provide long term loan facilities for entrepreneurs from its accumulated funds, he revealed
Dr Jayasundera noted that a Banking and Financial Commission will also be appointed to drive development, credit, equity, various banking and financial products, insurance, leasing, merchant banking, investment banking and project financing. This Commission will conduct public hearings, have discussions with bankers, share international experience and propose required changes beyond the regulatory and conventional aspects. The Banking Act will be amended to facilitate a regulatory mechanism for local commercial banks. These proposed amendments will streamline and strengthen the regulatory and supervisory framework for licensed banks to be in line with the best global standards and practices, he said.
Various indirect taxes have now been brought down to VAT and NBT. The NBT has been harmonised with the provincial turnover tax, so that the provincial and national government will share the revenue. With regard to imported branded products which are not manufactured here and are subject to Port Levy and NBT only, the combined tax rate is around 7 %, he disclosed.
Those who are liable to PAYE tax no longer have to pay taxes if their income is below Rs 50,000. Even if it is above Rs 50,000 per month, it is a much simpler rate. No one will pay over 24 % compared to almost 37 % earlier. Furthermore tax is deducted at the source and as such there would be no need to file returns if the taxpayers do not have other sources of income, he said. |
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