The Inland Revenue (Amendment) Bill has now been passed by Parliament after considerable debate and public discussion.
Supporters of the amendments have argued that stronger enforcement powers are necessary to improve tax compliance, broaden the tax base, and address long-standing revenue leakages. Few would disagree that Sri Lanka requires a more efficient and credible tax administration system.
However, many taxpayers, professionals, and SME operators expressed genuine concerns during the debate. Among the concerns raised were the criminalisation of certain compliance failures, the potential hardship to small businesses arising from the reduced VAT threshold, and the risk that ordinary citizens unfamiliar with complex tax procedures may become exposed to severe penalties.
Questions were also raised as to whether sufficient reforms have first been undertaken within the Inland Revenue Department itself, particularly in relation to administrative efficiency, digitisation, taxpayer education, and the simplification of procedures. Measures to prevent bias in making assessments need also be addressed
Unfortunately, many of these concerns appear not to have been fully addressed prior to the passage of the Bill.
The legislation is now part of the law of the land. What remains to be seen is whether the Inland Revenue Department will exercise these extensive and in some respects, draconian powers, with fairness, proportionality, and due care.
Ultimately, the success of any tax system depends not merely on stronger penalties, but on public trust, transparency, consistency, and the confidence that powers will be exercised reasonably and responsibly. Recourse to appealing assessments by the taxpayer in mitigating circumstances, may also be catered for.
A Concerned Citizen and Taxpayer