The Parliamentary Committee on Public Finance (COPF) has questioned the Ministry of Finance on why only 800,000 individuals fall under the tax net despite a workforce of nearly 8 million.
Finance Ministry official and Deputy Minister Harshana Suriyapperuma informed the COPF that the system is such that only around 800,000 out of the approximated 8 million satisfy the tax threshold.
The Committee on Public Finance met in Parliament this week (18 Mar), Chaired by MP Harsha de Silva, to discuss the Inland Revenue (Amendment) Bill to amend the Inland Revenue Act, No. 24 of 2017.
The tax net of the workforce was discussed when the Committee took into consideration the proposal that Personal Income Tax (PIT) relief be increased from Rs. 1,200,000 per annum to Rs. 1,800,000 per annum under the Bill.
Accordingly, the said Bill also proposes the Income Tax rate on betting and gaming, tobacco and liquor industries to be increased from 40% to 45%.
Furthermore, the export of services will be liable for income tax at the rate of 15% and proposals have also been made that the Withholding Tax (WHT) rate on interest be increased from 5% to 10%.
Considering the PAYE data analysis in-depth, the Committee on Public Finance concluded that there is an error in the existing data. Accordingly, the Committee Chair directed the officials to provide an accurate data analysis to the Committee.
Moreover, it was also disclosed at the Committee on Public Finance that the implementation of obtaining a Taxpayer Identification Number (TIN) is essential for paying taxes / importing/exporting or obtaining any services from the Inland Revenue is not functioning. The Committee instructed the officials present to update the Committee on the status regarding the smooth execution of the process.
Considering the proposal on the Income Tax rate on betting and gaming, tobacco and liquor industries to be increased from 40% to 45%, the Committee expressed its dissatisfaction over the failure of the Ministry to duly establish a casino regulator. Furthermore, the Committee Chair also expressed its dissatisfaction given that the Inland Revenue Department had failed to provide proper data requested by the Committee previously on the revenue received from Casino operations over the last 5 years.
The Committee also questioned officials present regarding having to pay 25% for tax appeals. The Committee questioned if it is ethical to demand a cash deposit instead of a bank guarantee when making an appeal. Deputy Minister Harshana Suriyapperuma stated that people use the appealing mechanism as a tool to avoid paying revenue due to the government and hence a cash deposit in replace of a bank guarantee has been proposed. The Committee directed the officials to provide data analyzing the cases for better understanding to arrive at a conclusion on the matter. (Newswire)
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