Unique ID and Blockchain technology to upgrade SL tax administration
The government has made a tax identification number compulsory while planning to introduce Blockchain technology with the aim of digitising the way tax authorities operate, allowing for greater transparency, accuracy, and efficiency in tax collection.
Budget 2023 had proposed to “introduce compulsory tax registration for all residents who are above 18 years of age without considering their annual income and tax-free thresholds”.
The International Monetary Fund approved economic reforms programme has indicated the need of increasing the country’s tax base with the introduction of tax identification number coupled with Revenue Administration Management Information System (RAMIS) minimising the increase in unproductive new registrations,
Special programmes are being implemented to include 16 million people over the age of 18 years in the tax payment process.
The Inland Revenue Department (IRD) has been directed to focus on increasing more productive registrations and handling already registered unproductive taxpayers in a more efficient manner while improving tax compliance.
Acting IRD Commissioner General Upul Jayawardena has confirmed the budget proposal which makes it mandatory to mention a tax number when opening a current account, seeking approval for a building plan or registering a vehicle or a property.
He said the date for this proposal to become effective will be decided in consultation with the Finance Ministry.
Blockchain technology can provide a secure, decentralised digital identity verification system that can be accessed by all stakeholders, including taxpayers, tax authorities, and third-party service providers, a senior ministry official said.
It will help tax authorities to verify the identity of taxpayers more efficiently and effectively, reducing the risk of identity fraud, he added.
198,253 new tax payers have been registered with the IRD in 2023, a high IRD official informed the Committee on Public Accounts (COPA) recently.
Around 13,000 institutions have registered for Value Added Tax (VAT), he said adding that investigations are underway to find out as to whether the VAT payment is properly made to the government by those institutions.
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