TIN mandatory for bank accounts under new tax reforms

The Cabinet of Ministers has greenlit a proposal to amend the Inland Revenue Act No. 24 of 2017, introducing sweeping changes to Sri Lanka's tax administration framework. Chief among the reforms is the mandatory requirement for all individuals to provide a Tax Identification Number (TIN) when opening any type of bank account.

The move, presented by President Ranil Wickremesinghe in his capacity as Minister of Finance, Policy Planning and Economic Development, is part of a broader initiative to enhance tax compliance and improve revenue collection.

The amendments follow the enactment of the Inland Revenue (Amendment) Act No. 2 of 2025, which came into effect on April 1.

Under the new law, the withholding tax rate on interest income was raised from 5% to 10%.

However, the change sparked concern among low-income earners, as the advance income tax was being applied even to those earning below the annual tax-free threshold of Rs. 1.8 million.

In response to these concerns, the government has proposed a solution aimed at easing the burden on small depositors.

The Cabinet has approved the introduction of a self-declaration mechanism for individuals whose annual income falls below Rs. 1.8 million. Through this declaration, qualifying depositors can seek exemption from the 10% withholding tax on interest income.