Sri Lanka tax structure to be streamlined

[TamilNet, Monday, 03 August 2009, 05:12 GMT]
Against the backdrop of the massive IMF loan of US$ 2.6 billion the government is preparing a complete overhaul of Sri Lanka’s tax structure with the intention of streamlining and enhancing tax revenue, the presidential secretariat said.

The Letter Of Intent signed between the Sri Lankan government and the IMF on July 16 underlines the necessity to rebuild and strengthen the country’s economy.

With this in mind President Mahinda Rajapakse has appointed a 10-member presidential commission headed by former Colombo University Vice Chancellor W.D. Lakshman to recommend changes to the tax structure, it said.

The Commission is expected to study the country’s existing tax system, the category of taxes, the framework of both personal and corporate income taxation, problems connected with the implementation of VAT, the refund mechanism of VAT, the Custom Tariff regime, Excise tax regime and Excise Ordinance, various Cess schemes among other matters before making recommendations for a thorough overall of the tax structure.

It will investigate concessions granted by way of tax holidays and exemptions under the Inland Revenue Act, Customs and BOI laws since 1977, the administrative structure of the Inland Revenue Department, The Sri Lanka Customs and Excise Department.

President Rajapakse had on Thursday expressed his disappointment over the small number of people paying income tax.

Prof. Lakshman said it was obvious that the country’s tax structure and revenue collecting mechanism need a complete overhaul and the Commission is expected to submit an interim report by October 31 after the public hearing and submissions.