Special Court to change tax appeal process preventing the law’s delay of 15 years.

By: Staff Writer

January 06, Colombo (LNW):The government was considering establishing a special court complex within the judicial system to hear tax appeals in the backdrop that the appealing process allows any person to stay without paying taxes for 15 years.

The Minister of Justice Wijeyadasa Rajapakshe has agreed in this regard during a special meeting held in the Parliament to obtain ideas for the legal amendments to be made in order to increase the state revenue.

Chair of the Sectoral Oversight Committee on National Economic and Physical Plans Mahindananda Aluthgamage said any person can stay for 15 years without paying taxes.

“The Inland Revenue Department has 30 months under the existing Act to assess a tax file and another 24 months to consider appeals.

Accordingly, a tax file remains in the Inland Revenue Department for more than 54 months and post appealing to the Tax Appeals Commission, they receive 2 years according to the Act,” he said adding that thereafter, appeals can be made to the Court of Appeal and the Supreme Court which will last for approximately 15 years.

The Committee observed that the current period of two (02) years for the Commissioner to hear appeals is too long and it is desirable to reduce it to six (06) months.

Meanwhile, the officials of the Inland Revenue Department said that the arrears in tax revenue due on 30.06.2023 is 943 billion rupees, and Rs. 767 billion could not be recovered due to various reasons and the recoverable amount is 175 billion rupees. They said that 37 billion rupees have been collected as tax arrears last year

Sri Lanka’s total tax default and penalty for default have skyrocketed to 619.7 billion rupees at the end of 2021, the state-run Inland Revenue Department (IRD) data showed amid more tax evasions and avoidance despite two tax amnesties in the same period.

The tax default which stood at 22.5 billion rupees by end 2000 has jumped to 368.4 billion rupees by end 2021, an IRD response to a Right to Information (RTI) request showed.

The penalty imposed on taxpayers for defaulting their payments stood at 251.4 billion rupees by end 2021.

“Two tax amnesties have been given by the government during the last 22 years,” the IRD said in the response.

Though the total defaulted tax was 368.3 billion rupees, the IRD data showed only 84.5 billion rupees had been categorized as “collectable tax” as 283.7 billion rupee worth tax receivables have been disputed by the taxpayers.

Similarly, only 75 billion rupees worth of penalty was categorized as “collectable” out of the total 251.5 billion rupees due to the taxpayers have disputed or challenged in court for dues equal to 176.4 billion rupees, the IRD data showed.