Over 200 ad-hoc tax concessions granted without any rationale by previous Finance Ministers: Mangala

Addressing a public seminar on the new Inland Revenue Act that will be operational from 1st April 2018, Finance and Media Minister Mangala Samaraweera said that numerous ad-hoc tax concessions, over 200 of them, which were granted without any rationale according to the whims and fancies of the finance minister of the day, resulted in Sri Lanka being one of the lowest tax revenue countries in the world.

The Minister said that despite the continued rise in income levels, our tax revenue failed to record any improvements.

" Over two decades Sri Lanka recorded a downward tax revenue that reached just over 10% in 2014 as a share of the GDP. Sri Lanka was among the lowest tax revenue countries. Despite the continued rise in income levels, our tax revenue failed to record any improvements. Some experts opined that on one hand our tax system was complex and confusing, on the other hand there were numerous ad-hoc tax concessions, over 200 of them, which were granted without any rationale, according to the whims and fancies of the finance minister of the day."

Minister Samaraweera further said that the elimination of tax exemptions through this new Act would create a level playing field for everyone to do business, moving away from the culture of preferential treatments. He said that the government is setting the platform and working continuously on promoting the business climate by enhancing taxpayers’ protections and providing greater certainty on tax affairs .

Samaraweera emphasized that this new legislation will carve a clear strategic direction about taxation in the country where the government expects to increase their share of direct income tax against indirect taxes.

"The preferred ratio is 40% to 60% from the current level of 18% to 82%. That is one of the hallmarks of a fairer tax system. Yet, we are fully cognisant that this is an enormously challenging goal. The new Inland Revenue Act is a timely step in that direction. I hope we will have a smooth transition and a better system with the passage of time," the Minister added.