The Government plans to interlink bank accounts to prevent people from evading the tax net without obtaining a Tax Identification Number (TIN), Deputy Minister of Finance and Planning Dr. Harshana Suriyapperuma said at a meeting of the Committee on Public Finance (COPF).
Upon being questioned by COPF Chairman MP Dr. Harsha de Silva about the implementation of the TIN during the meeting, Department of Fiscal Policy Tax Policy Adviser Thanuja Perera revealed that since the relevant act was still being amended, there was currently no requirement for taxpayers to produce a TIN.
The COPF had raised concerns over the limited tax net coverage, questioning why only around 800,000 individuals registered with the TIN were subject to income tax despite Sri Lanka’s workforce comprising approximately eight million people.
The matter was discussed during a committee meeting held in Parliament on Tuesday (18), chaired by MP Dr. Harsha de Silva, as part of deliberations on the Inland Revenue (Amendment) Bill, which seeks to amend the Inland Revenue Act No.24 of 2017.
Officials from the Ministry of Finance, along with Deputy Minister Suriyapperuma, explained that the existing tax structure allowed only around 800,000 individuals to meet the taxable income threshold.
“We know that only 10% of people are paying their taxes, either voluntarily or withheld at source, so let’s start by categorising this,” Dr. de Silva had said.
Deputy Minister Suriyapperuma responded to this by explaining how the Government planned to expand the tax net eventually.
“There are many ways to track the capability of individuals to pay taxes. If you look at bank accounts, that would also be an indicator. However, these are not interlinked, which is why they are capable of getting away with avoiding paying taxes. Therefore, we plan to interlink them in future, slowly and steadily increasing the number from 800,000,” he said.
One of the key proposals under the bill is an increase in the Personal Income Tax (PIT) relief threshold from Rs. 1,200,000 per annum to Rs. 1,800,000 per annum. Additionally, the proposed amendments include an increase in the income tax rate on the betting and gaming, tobacco, and liquor industries from 40% to 45%.