• A guide to opening tax files online and in person 

As this year comes to a close, the task of opening a new tax file is on the minds of many professionals and first-time taxpayers. A tax file needs to be opened with the Inland Revenue Department (IRD) for all those above the age of 18 years, from 1 January next year (2024). 

President and Minister of Finance, Economic Stabilisation, and National Policies Ranil Wickremesinghe, in his 2023 Budget, urged all above 18 years of age on or after 1 January 2024 to open a tax file with effect from the said date. This serves as a first step, though many would not have to pay taxes due to falling below the tax-free thresholds. The aim is to introduce measures that identify high-income earners and include them in the tax net.

While the process may seem daunting, with the right information and guidance, individuals across different job levels and income levels can navigate the system seamlessly.

To obtain the Tax Identification Number (TIN), there are two primary methods as recommended by the IRD.

Open your tax file on your mobile

Visit the official website of the Department of Inland Revenue (www.ird.gov.lk) and select your preferable language of use, and under the main tabs, go to the electronic services (e-service) tab. Click on access to e-services. Then, click on taxpayer registration where you will be provided with the opportunity to identify the registration type where you need to create the tax file. 

A wide range of options are provided under the drop-down menu where categories similar to individual local, registered company, and individual foreigner are visible among many others. If you are a Sri Lankan citizen, select the individual local option and further fill out the taxpayer registration details, where the details with asterisks need to be filled out mandatorily. These details can be filled in the Sinhala or Tamil languages as well. This also includes the taxpayer’s permanent address along with the income type and profession. 

Under contact details, it is mandatory to fill out the email address and the civil status along with details of the spouse and children, which will prove beneficial when transferring assets to the children in the future. Under the individual business category, details of all individual businesses registered under the taxpayer’s name along with business registration numbers need to be filled as mandatory fields. 

A special notice has also been released by the IRD, which informs taxpayers regarding supporting documents, which indicate three mandatory documents that need to be uploaded. If the taxpayer intends to request the TIN as an individual entity, a copy of the National Identity Card (NIC), or if the taxpayer is a foreign national, a copy of the passport needs to be uploaded. A scanned copy of the certificate of business registration of any businesses registered under the taxpayer also needs to be uploaded. 

If the current address differs from the permanent address mentioned in the NIC, a proof of payment certifying the residence of the applicant should be uploaded. This billing proof could be a utility bill similar to the electricity or water bill, a bank statement, or a Grama Niladhari certificate.  

Under the “purpose of registration”, the applicant’s purpose of registering can be entered. It is advised to add it as being for “tax purpose” if there are no specific purposes of applying. If there is a specific reason for applying, that reason needs to be specified separately.

Once all entered details are verified, submit the online form and subsequently, the submitted form can be saved in the portable document format. After submission, the applicant will receive an acknowledgement that the applicant has requested for a TIN. The IRD will send a TIN within five to six working days to the applicant’s email along with a confirmation document which will be posted to your mailing address within one to two weeks. This is the straightforward process to acquire a TIN using only the applicant’s mobile phone. 

Visit the IRD and open your file

The second method to request for a TIN is by visiting the IRD and by physically obtaining and filling the aforementioned application form. The form can be physically submitted along with the copies of the supporting documents and the TIN can be obtained instantly from the IRD.

Further, the application form for taxpayer registration can be downloaded from the official website of the IRD, under the tab on forms and returns and the downloads tab where a printed copy can be submitted to the IRD. 

As per the Gazette notification released last June, it is now mandatory for professionals falling under 14 specified categories to register themselves with the IRD. The list of professionals who must register with the IRD are: practitioners registered with the Sri Lanka Medical Council (SLMC), members of the Institute of Chartered Accountants of Sri Lanka, members of the Institute of Certified Management Accountants of Sri Lanka, members of the Institution of Engineers Sri Lanka, members of the Association of Professional Bankers, members of the Sri Lanka Institute of Architects, members of the Institute of Quantity Surveyors Sri Lanka, attorneys-at-law of the Supreme Court of Sri Lanka, individuals who have registered their businesses in Divisional Secretariats, individuals who own vehicles registered (excluding three-wheelers, motorcycles, and hand tractors) with the Motor Traffic Department, individuals who have purchased or acquired any immovable property in Sri Lanka through deeds transfer on or after 1 April 2018, employees whose monthly contribution from both the employee and the employer to any provident fund exceeds Rs. 20,000, individuals who obtain approval for a building plan from a local authority, and any other individual who receives payment of Rs. 100,000 per month or Rs. 1,200,000 for a 12-month period for providing any services in Sri Lanka.

According to the notification, individuals who do not fall within any of the specified categories but are aged 18 or older as of 31 December 2023, or who reach the age of 18 on or after 1 January 2024, are required to register with the IRD starting from 1 January 2024.

President Wickremesinghe, who also serves as the Finance Minister of the island nation, has set a target to boost tax revenue by 47% in 2024, reaching Rs. 3.82 trillion.

During his 2024 Budget speech last month (November), the President acknowledged the primary reason for individuals to refrain from opening tax files as being due to a perception that there would be unnecessary trouble if they open a new tax file. He admitted that there are unnecessary complexities in tax collection, and that taxpayers have to adhere to the undue influences of certain officials.

Nevertheless, the IRD has proposed to impose a fine of Rs. 50,000 and 5% of the tax payable on individuals who retain tax files without the timely submission of the report, considering that only a few thousand individuals initiated the process of opening tax files in the year 2023.

Therefore, the submission of a TIN will be mandatory for actions such as opening a bank current account, securing an approval for a building plan, or registering motor vehicles.

The Government has also increased indirect taxes including value-added tax as a strategy to enhance the nation’s revenue and meet the targets set by the International Monetary Fund. 

(The writer is a journalist)

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The views and opinions expressed in this article are those of the author, and do not necessarily reflect those of this publication.