25 October, 2020

Blog

On Proposed New Inland Revenue Law

By Mahinda Rajapaksa

Mahinda Rajapaksa

A Bill to replace the Inland Revenue Act No: 10 of 2006, is to be taken up in Parliament on Friday the 25th August 2017. We oppose this Inland Revenue Bill for the following reasons:

1. Under Clause 5(2)(f) of the Bill, the employer’s contribution to a provident fund will be considered a part of an employee’s taxable income. This will make EPF payments a burden to employees. Under Item 8 of its First Schedule, the tax on income generated by provident funds through their investments will increase from the present 10% to 14% thus reducing the income available to fund members.

2. The tax exemption granted to all places of worship has been dropped in the proposed law and Item 6 of the First Schedule has fixed the tax for such charitable institutions at 14%. According to the Third and Fifth Schedules, places of worship and charitable institutions will be eligible for a tax concession only if the money is used to provide care to children, the elderly or the disabled. The incomes of some places of worship are supervised by the government and such institutions will be taxed to the maximum whereas other places of worship not supervised by the government will be able to escape the tax net. Such discriminatory practices will give rise to social tensions.

3. Furthermore, the existing 2006 Inland Revenue Act provides concessions through Chapter III on tax exemptions to various fields deemed worthy of preservation such as local handicraft industries, film and drama producers etc. This Chapter also has concessions for various economic activities such as new undertakings in pharmaceuticals, renewable energy, production for import substitution etc. There are over 200 such exemptions in the present law. All those concessions are to be removed by the proposed new law.

4. Independent professionals are at present taxed at flat rates for incomes above the tax free threshold of Rs. 500,000, at 12% for up to Rs. 25 million a year, going up to 16% for anything above 35 million. Under the proposed law, professionals will be taxed at the rates applicable to individuals – tax free for the first Rs. 600,000 and for each succeeding Rs. 600,000 at rates starting at 4%  and increasing gradually to 8%, 12%, 16%,20% with the maximum rate of 24% applying to any income above Rs. three million a year. The income tax for professionals had been kept low so as to encourage them to remain in Sri Lanka without moving overseas.

5. Under Item 10(b)(iii) of Schedule One, rental income will be subject to a 10% withholding tax. This will cause immense hardship to middle class people trying to supplement their income by renting out properties.

6. Under the First Schedule of the Bill, the maximum rate of tax applicable to individuals will be 24%. Though the maximum rate applicable to companies is 28%, in certain specified fields such as education, agriculture, tourism, IT based services and exports, the applicable rate will be 14% regardless of the size of the enterprise. This will result in anomalous situations where a large company providing educational services may be taxed at 14% while a teacher who gives private tuition in his home will be taxed at 24%; a major agricultural company will be taxed at 14% while an enterprising youth engaging in market oriented agriculture will be taxed at 24%. The tax on the small and medium sector is also to go up from the present 12%, to 14% under the new law.

7. Under the 2006 Inland Revenue Act, and the Acts that preceded it, the law had conferred power directly on the Assessors and Assistant Commissioners of the Inland Revenue Department.  However under Clauses 97 and 98 of this Bill, all power is concentrated in the hands of the Commissioner General who may delegate his powers to individual officers entirely at his discretion. The Commissioner General of Inland Revenue is appointed by cabinet and functions under the Finance Minister. Under Clause 100, the Minister will have access to confidential information on tax files. The concentration of all power in the hands of the Commissioner General will give rise to a situation where politicians are able to stage manage the tax assessments that are served on individuals. The conferring of powers directly on the officers of the Inland Revenue Dept. was a safeguard to prevent the concentration of power.  When power is vested in the Assessors and Assistant Commissioners, it is more difficult to misuse ministerial power to obtain confidential information on individual cases.

8. At present, there are several dispute resolution mechanisms in the Inland Revenue Department. A party that is not in agreement with a tax assessment will first be given a hearing by another Assessor. If unresolved, the grievance will be heard by a higher official. At the next stage, the Commissioner General will appoint a senior official to go into the matter. After this an appeal can be addressed to the Tax Appeals Commission which is an independent body outside the IRD. The final recourse for an aggrieved party would be the courts. This system will work only when the law confers power directly on the Assessors or Assistant Commissioners. When all power is concentrated in the hands of the Commissioner General, there will be little point in having appeals heard against the Commissioner General by other officers under him. Hence if the new law is passed, some taxpayers may have no option but to go directly to either the Tax Appeals Commission or the Courts.  

The policy on which the proposed new Inland revenue law is based, is in keeping with the ideology of the UNP but is contrary to that of the SLFP. No member of the SLFP can pass legislation that seeks to tax provident fund contributions, to tax individuals more and companies in the same industry less, to increase the tax burden on the struggling middle class, and to tax places of worship. This new law is weighted against local production, local entrepreneurship, local creativity and local people and favours multinationals and foreigners. I wish to remind all SLFP parliamentarians serving in the government that even though the President was elected to power largely on UNP votes, that all SLFP parliamentarians were elected to parliament by SLFP/UPFA voters in a campaign led by me. Therefore, all MPs of the SLFP are duty bound to vote against this Bill when it comes up in Parliament.  

Print Friendly, PDF & Email

Latest comments

  • 12
    2

    The Big Hora,

    The days are nearing for your end, just read a new item that most of your Hora Kalli Sangamaye Members are going to be prosecuted by the High Court very soon.

    Get ready with your Criminal Defence Team without wasting our time.

    Happy Living, Maha Rajathumanani.

    • 3
      0

      Ansar – “The days are nearing for your end, …”. I concur, but what will happen to the “MOU” the big hora had with Ranilpaksha in January 2015? Remains to be seen!

      • 2
        0

        No worries Mike, I think the MOU is also under fire, after another Rajapakshe also is sent to the DEN OF THIEVES.

        Now they have a President’s Counsel for the defence of the THIEVES and MURDERERS, what a combination…Deadly isn’t it.

        Did you watch THICK OF THIEVES, lovely movie of Morgan Freeman and Anthonio Banderas.

        Must prepare a list of good English Movies for these guys to watch, when they go behind bars, poor fellows let them have some fun, but would they understand the film. Let’s send in Dayan the D……for assistance, he knows a bit of English at least.

        I am not sure of his prowess in political science, anyway. If not how will he back an ACE MURDEROUS AND MOST CORRUPT FAMILY for the highest seat of our beautiful Nation.

    • 5
      1

      We are a welfare state and hence everyone should pay taxes to fund the subsidies and hand outs. At present direct to indirect tax % is 80:20 and needs to come down.

      The only way is to increase direct taxes. All exporters including IT export companies who were at 0% are now taxed at 14% and cannot grumble.

      Individual taxes are going up from 16% to 24% and looks fair.

      Cannot object to apartment sales being liable to capital gains tax

      Only issue is that politicians are not taxed.

      • 1
        0

        If direct taxes goes up the indirect taxes should come down proportiantly. No one can expect people to obey this harsh taxing system.

    • 4
      1

      This man has been a shame to our nation to this day, i heard him saying that his party chairman ship was grabed by My3.
      But he himself louded that two years ago, that he handed it over to My3:
      Very same man to utter so stupid statements can be valid only to Punnakku eating majority folks scattered across the country.
      One way, it is very sad to the people, since they have been cheated by this man again and again… since this man has no whatsover levels reached to relinquish his greediness to power.
      All known leaders on this planet, not forgetting Nelsen Mandella, just handed over his duties tothe successors and became silent. So is obama even if Trump is seen to be a man similar to elephant in a porcelan house in term s local and world politics.
      I got to know from Americans last week, they really regret to have made a big big mistake.
      Most dont even want to share their thoughts about the election and current politics being played by pulli gona – Trump:
      In such an era our people to remain deaf and blind this way, is a curse actually.

      God bless srilanka !

      • 1
        1

        South africa is not country that we should emulate. Mandella is not a good leader but someone who tried to appease the white men inorder to restore balance.

    • 0
      0

      This comment was removed by a moderator because it didn’t abide by our Comment policy.For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2/

    • 0
      0

      Real problem has been.. he does not know what his mouth has been droping out.

      However, he has no control over on his both ends may lead him to danger ..

      As many predicted, August seems to be the most important month of the year, with paving way LEGAL AUTHORITIES to do whatever they can to show that BUNCH OF THUGS should be punished.
      If people are wise, they should raise the question there had been any leader in this country with the mountains of allegations.

      Wait and see, how all these work for the bunch of thugs. I think MR is cutting his neck by his own.

  • 9
    0

    Who is the actual author. If MR is the author no point in reading or commenting on it.

    • 5
      0

      This may be Bandula Gunawardenas work, but published in Maharajas name. If Maharaja can understand the Act it is a surprise.

    • 2
      0

      We know perfectly, a man who has no good memory to have prevaricated, he may use any guy to add his thoughts, similar to that of a demencia patient.

      I really dont know why the bugger is harboured to lanken politcs, even if a larger majority of this country is against him returning to power ?

      This is really a shameful situation for the nation. And it is very bad that the bugger feels that he is the only person to do the job properly. That ballige putha Jackson Anthony and the like Artists to have made the man a king- may well have been the reason – just lies passed on him making him a king may have misled the bugger.

  • 9
    1

    Mara is the most corrupted leader in the history of Sri Lanka and what you have written is non-sense. People know that you pay DJ and a few others for writing things in English. How can you write in English without the ability form a couple of correct sentences in English? What you did during your 10 year reign of terror and corruption is not a secret. Here is brief snapshot of your despicable record:

    1. Soliciting sex from girls of the families that lost their loved ones due to Premadasa Terror campaign in exchange of your service as a human rights lawyer in 1980s

    2. Raping girls in villages from down south on the promise of jobs

    3. Stealing $800 million of Tsunami funds through fake NGO called Helping Hambantota set up with assistance from Willie Gamage and depriving poor families of their right to rebuild their lives devastated by Tsunami

    4. Taking 19 billion US dollars as commissions from Chinese government corporations through white elephant useless development projects such as Hambantota Harbour, Airport, and southern expressway

    5. Putting Sri Lanka economy into an endless misery by taking high interest loans from China and pocketing in 40% of that money

    6. Nurturing an unprecedented culture of corruption and political victimization with immunity

    7. Killing and attacking journalists, judges, innocent civilians for 10 years

    8. Appointing an uneducated GoTa as defence head and stealing the credit of ending the 30 year war from SF, the true hero who led the final war against LTTE

    9. Making a synthetic lawyer of an idiotic son who couldn’t even pass his GCE (OL)

    10. Killing the most famous rugby player on behalf of another moron son

    • 2
      7

      Maharage: why just accusations. Did your Yahapalana govt catch anything important ?. People know better things, I am sure, the president and Prime minister know more, yet, they did not do anything at the right time. they were playing games. Now, things are turning around, it looks UNP Ranil is over at least politically because he doe snot resign and he does not fire his gang of theives. One bieg thief just resigned and waiting at the door to be re-appointed. There is no recovry of of all those illegall politial donations, dividends earend in robberies. Why just accustions and not the incompetant and eually corrupt and fradulent present govt.

  • 7
    0

    “it will create social tensions”
    Sir you know how to control social tensions better then the present government. Why don’t you give advice them. White vans, staging accidents, sending people to girithale camp etc.. You know better than anyone. Sorry your whole family know better than anyone.

  • 6
    1

    Mahinda,

    Buddy, like this piece, all your life others have written for you, starting from the law collage exams. And like a good parent you passed that on to your children.

    You and your family with your loot and elevated position in society, and millions of honest Lankans toiling away in poverty just to survive, proves that deception, corruption and crime in the end pays.

    Pays very well.

    It’s baffling why people want to follow Buddha and wallow in poverty when they can follow your example in to easy riches and comforts.

    Then again there are those who follow your example hovering around you perhaps someday it’ll end up as a religion.

    • 1
      0

      nimal fernando – “Buddy, like this piece, all your life others have written for you …”. I can name two who write on his behalf, one is a smart ass war monger whose first name, if spelled backwards, would mean “A water nymph”. It can also mean “A really smart, tall, funny male who has an exceedingly large ….. measuring 14″ when erect.” FYI !

    • 3
      0

      nimal fernando

      “Buddy, like this piece, all your life others have written for you, starting from the law collage exams. “

      Come on its unfair on your part to accuse him of cheating at the examinations. Were there exams at the end of the course as it was a special course introduced by the weeping widow Siri Mao exclusively for MPs.

  • 1
    0

    MaRa’s Last ditch attempt to assert that he is still the unoffocial paramount leader of the SLFP that was founded by Chandrika’s father , saved by LK from the condemnation by the IC which made MaRa to become the President of SL and no 1 of SLFP ,

    Any bets on whether the real patriot of SL and Chairman of SLFP going under 6 foot in the near future, if MaRa wins this by defeating the above said proposed new Inland Revenue Law in the parliament.?

  • 5
    0

    Buddhism may have 2500 years history. That is immaterial to the Sri Lankan Buddhists as they were and are not civilised accordingly, but always as robbers and beggars.

    Now the robber is giving an explanation, true, some of them are. However what we have now on both side are beggars. Robbing in daylight, Robbing from the poor who find difficult to make the ends meet. Robbing from savings, rent, pensions, sick. Yes that is Buddhism. Best profession left for Sri Lankan now is to become monks and Bikkuni. You will be worshiped, given 5 star food, anything to drink, a la carte menu food supply, people will donate graciously, protect you from any harm, always somebody to wash your linen, even the government will turn to you for help.

  • 4
    4

    Inland Revenue bill is what the IMF wants. IF any govt bowwors from IMF or world bank, the govt has to do what the IMF is asking. that is generally, suck as much as possible blood from the lower middle class and fatten the rich wealthy businesses.

    • 3
      0

      If so, ‘Learn how to live without borrowing’.” Majjima Patipada & Alpechchathaa”

    • 1
      2

      This is the bare truth most of the idiots in this column do not understand – IMF will not stop until we become a paralyzed nation and unable to stand up on our own – unfortunately we do not have leaders who could stand against these rascals

  • 8
    0

    There had been so many laws in Srilanka , have they ever been implemented under any government.
    specially for politicians like yourself who can always BEND the law.You have been milking enough and now its the Yahaplanist. good luck on your dreams for big tits!!!

  • 4
    0

    Mahinda old pal

    It’s comforting to know that you are concerned about the poor tax payers of SL but before you comment on the proposed tax laws, can you disclose the tax returns of yourself & your family in the last 5 years?

  • 4
    0

    Raj,
    I think there is a typo error in your comment.
    It should have been 15 yrs instead of 5 yrs

    I feel it would be more revealation of facts if MR could disclose his tax returns ever since he became PM under CB’s patronage.

    But still one more item. How about his other assests including funds parked out sude SL ? For those does he have to file tax returns ?

  • 2
    0

    Thanks to the author Mahinda Rajapaksa for enlightening us “On Proposed New Inland Revenue Law” particularly on EPF contributions. He does not mention that EPF needs protection from pilferage.
    The tax changes looks reasonable. But our law makers simply are too damn damn damn daft to read, understand and then debate the contentious issues.

  • 2
    4

    Sri lanka can adjust to lower taxes if Sri lanka increases it’s tax base by not letting VVIP thieves steal. See the millions they talk about. that is all taxes lost to the govt. It looks Perpetual treasries and Penthouse Ravi both have companies registed in Small carebbena islands. That is all for tax evation. There are at least two newspapers openly bash Mahinda Rajapakse and support all the thefts by UNP. These taxes are what IMF wants. American Capitalism no longer works. In there, poor peole are killing each other and accusing muslims and that and this. Feds made rich corprations rich by printing money and buying their bad debts. That did not resu,t much. At present a good capitalism is what China is practising. Even Canda is doing that by taxing the rich provinces and distributing among poor provinces. USA also has same thing by giving the taxing ability to states and municiplaities. Sri lanka is not like that.

  • 1
    5

    Tamils are asking a police force and ?lands fo rthem. but, they are not asking the Taxing ability to them. If that happens all; the Tamils leave North and come to colombo.

  • 3
    1

    Inland revenue act is to borrow more, satisfying IMF and World Bank. This method was no good for old Royals as the 40% doesn’t come on that borrowings. One time, even Mrs.Clinton tried to block Old Royals borrowing a $2.5 Billion security loans, but gave up as Sonia wanted to fund Old King free. That is why that loan is sour grape for Old Royals.

    Any borrowing will make the land more debted. Further, as the international confidence is at very lowest level, just creating hardships to local people may not bring the expected private investment. So far that has been very disappointing news to Yahapalanaya. Everybody saw the local Volkswagen fiasco. Recently some news suggested that American firms are disinterest in investing, mainly because of the Yahapalanaya’s aloofness to investigate the last regimes lootings, with other law and order shortfalls.

    Yahapalanaya is not ready to change the constitution, which has been promised to UNHRC and UN, to allow Foreign Judges and Lawyers to participate in Old Royal Regime war crimes. But changing the Inland Revenue act to borrow.

  • 1
    1

    Most Comments here are by people who have no idea the drain on the economy and the stagnation that was caused by a 30 yr war. Robbery has to be condoned at all quarters dont forget the Bond scam that occured with the recent Government. All governments and Individuals in power cheat and rob, its upto us Citizens to cry foul whenever. Thanks to this Government the Ag and Judiciary appears to be independent.

    There a salient factors in the above article for us Citizens to be worried about. Governments are always after the EPF.

  • 2
    0

    MR has changed it appears.Reformed may be like Angulimala now thinking about the tax payers. Very good people realizing their mistakes even late. Coming from a man who stole taxpayers money to build a monument for his farther in a place where poor people find it difficult to find money to give a decent burial to their parents.

  • 1
    0

    what a load of rubbish
    how can the govt pay the hefty foreign loans taken by MR without raising taxes
    marginal tax rate reduced to 16 per cent to keep professionals at home ha ha
    doctors earning 100,000 a day and lawyers charging the same for a consultation going abroad
    no way dear man
    don’t let ghost writes r lead you up the garden path

  • 1
    0

    No worries Mike, I think the MOU is also under fire, after another Rajapakshe also is sent to the DEN OF THIEVES.

    Now they have a President’s Counsel for the defence of the THIEVES and MURDERERS, what a combination…Deadly isn’t it.

    Did you watch THICK OF THIEVES, lovely movie of Morgan Freeman and Anthonio Banderas.

    Must prepare a list of good English Movies for these guys to watch, when they go behind bars, poor fellows let them have some fun, but would they understand the film. Let’s send in Dayan the D……for assistance, he knows a bit of English at least.

    I am not sure of his prowess in political science, anyway. If not how will he back an ACE MURDEROUS AND MOST CORRUPT FAMILY for the highest seat of our beautiful Nation.

Leave A Comment

Comments should not exceed 200 words. Embedding external links and writing in capital letters are discouraged. Commenting is automatically disabled after 7 days and approval may take up to 24 hours. Please read our Comments Policy for further details. Your email address will not be published.