Approximately 8 million in the workforce, but only around 800,000 falls under the tax net – Committee on Public Finance questions officials

Taxpayer Identification Number (TIN) still not active – CoPF disclose

The Committee on Public Finance questioned why only around 800,000 falling under the tax net when there are approximately 8 million in the workforce. The Officials representing the Ministry of Finance and the Hon. Deputy Ministers (Dr.) Harshana Suriyapperuma stated that the system is as such that only around 800,000 out of the approximated 8 million satisfy the tax thresh-hold.

 

The Committee on Public Finance met in Parliament on the 18th March 2025, Chaired by of (Dr.) Harsha de Silva, Hon. Member of Parliament to discuss the Inland Revenue (Amendment) Bill to amendment the Inland Revenue Act, No. 24 of 2017.

 

This matter was discussed when the Committee took into consideration the proposal that PIT (Personal Income Tax) relief to be increased from Rs. 1,200,000 per annum to Rs. 1,800,000 per annum under the Bill.

 

Accordingly, the said Bill while proposing PIT (Personal Income Tax) relief to be increased from Rs. 1,200,000 per annum to Rs. 1,800,000 per annum, also Income Tax rate on betting and gaming, tobacco and liquor industries to be increased from 40% to 45%.

 

Furthermore, export of services will be liable for income tax at the rate of 15% and proposals have also been made that Withholding Tax (WHT) rate on interest to be increased from 5% to 10%.

 

Considering 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 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 of the last 5 years.

 

The Committee also questioned official present regarding having to pay 25% for tax appeal. The Committee questioned if it is ethical to demand a cash deposit instead of a bank guarantee when making an appeal. The Hon. Deputy Ministers (Dr.) 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. Committee directed the officials to provide data analyzing the cases for better understanding to arrive at a conclusion on the matter.

 

This meeting was attended by Hon. Deputy Ministers (Dr.) Harshana Suriyapperuma along with Hon. Members of Parliament Ravi Karunanayake, Wijesiri Basnayake, Nimal Palihena.