By:Staff WriterColombo (LNW): The Inland Revenue Department is set to take stern action against condominium management companies for evading taxes
This action has been taken at a time where Sri Lanka’s once thriving luxury condominium facing an unprecedented crunch this year with no new projects coming up in the next three months several leading developers cautioned.
Further, taxes imposed on condominium sales including VAT and social security contribution levy as well as the high level of interest rates that prevailed during the quarter have contributed towards the adverse market conditions.
In terms of price categories, exactly half of the transactions reported were in the price category between Rs. 25 Mn—Rs. 50 Mn, the Central Bank report revealed.
The Inland Revenue Department has written to apartment management companies seeking information regarding owners and residents of the condominium properties to identify individuals who might be evading taxes and avoiding due process to collect such data.
The move to request information from apartment management companies about condominium property owners and residents in Colombo has sparked controversy and raised ethical concerns.
According to sources, the Inland Revenue Department sent formal letters to apartment management companies in the city, asking for details about the owners and residents of the condominium properties, to identify individuals who may not be fulfilling their tax obligations and ensure their inclusion in the tax net.
The department has claimed that boosting tax revenue is crucial to navigating the current economic crisis, prompting them to seek out individuals who might be evading taxes.
However, this move has drawn criticism from communities who deem it ‘unethical’.
They argue while increasing tax revenue is important for the country’s recovery, the methods deployed by the department raise concerns about privacy and due process.
Some have expressed worries that the request for individual information might infringe upon citizens’ rights.
The Inland Revenue Department defended its actions, stating that the information request is aligned with administrative provisions outlined in section 123(1) of the Inland Revenue Act No. 24 of 2007.
The move has called for a broader debate about the balance between effective tax enforcement and respecting citizens’ rights to privacy.
This section likely pertains to the department’s authority to collect and use data for tax-related purposes. Nonetheless, individuals and privacy advocates remain wary of the potential misuse of personal data.
The move is also to shore up tax revenue in line with targets set by the International Monetary Fund (IMF) under its $ 3 billion Extended Fund Facility program.
During the six months ending June 2023, the Government revenue and grants had increased to Rs. 1,317 trillion in comparison to Rs. 919.5 billion recorded in the corresponding period of 2022, the Central Bank has announced.
Tax revenue amounted to Rs. 1.19 trillion as against Rs. 799 billion in 1H of last year. However non-tax revenue was down to Rs. 116 billion from Rs. 120 billion.