The Chamber Of Young Lankan Entrepreneurs (COYLE) urged the general public to obtain the Tax Identification Number (TIN) in order to avoid penalty, in a recent statement. 

The statement read: “ TIN does not imply liability for tax payment. Instead, it provides individuals with convenient access to numerous services offered by various state institutions without any complications. As of January 1, individuals failing to obtain a Taxpayer Identification Number (TIN) will face a penalty not exceeding Rs. 50,000, cautioned the Inland Revenue Department (IRD).“

In a recent update, the President's Media Division (PMD) has reported that only individuals aged 18 and above with an income exceeding the annual tax exemption limit of Rs. 1.2 million are obligated to pay income tax. 

Any Sri Lankan earning less than this amount is not required to pay tax. However, it is mandatory for individuals above the age of 18 by 31 December 2023, 1 January 2024, and upon reaching their 18th birthday to register and obtain a TIN. 

Additionally, individuals earning an income surpassing Rs. 1,200,000 during the fiscal year (from April 1 of one year to March 31 of the following year) are required to register for income tax. However, individuals with no TIN may face a fine under Article 177 of the Inland Revenue Act not exceeding Rs. 50,000.

Upon obtaining a TIN, individuals will be assigned a nine-digit number. Those paying income tax will receive an additional four numbers at the end of their TIN, while those paying VAT will have a TIN ending with the number 7000.

Despite this clarification, possessing a TIN is now mandatory for specific routine transactions starting from 1 February. These activities include opening a current account, seeking building plan approval,registering a motor vehicle, renewing a license and registering title deeds to land.

The Commissioner General of Motor Traffic Nishantha Anuruddha Weerasinghe, emphasised that vehicle ownership or registration cannot proceed without the TIN. Urging the public to promptly obtain the TIN for required services, he further advised against visiting the Department without the necessary number to avoid unnecessary delays.

Boosting Government revenue is crucial for Sri Lanka's economic recovery, especially during the current crisis, aiming to establish a more sustainable economic environment. However, it is essential to ensure that the tax burden is borne by those with the capacity.

Personal Income Taxes (PIT) play a vital role in revenue generation and addressing inequality through effective redistribution. In Sri Lanka, PIT revenue has experienced a steady decline, dropping from 0.9% of GDP in 2000 to 0.2% in 2022—lower than similar low-income economies. To maintain fairness and prevent bracket creep caused by inflation, adjusting thresholds becomes essential. A well-founded approach to determining thresholds, tax slabs, and rates is necessary for increased revenue collection and equitable taxation, it elaborated.