COPA proposes to amend the Inland Revenue Act to expedite tax collection

Sri Lanka’s tax revenue collection is to be expedited amidst technical and legal issues and certain obstacles in linking state institutions with the Revenue Administration Management Information System (RAMIS) of the Inland Revenue Department (IRD), official sources said.

Measures will be taken to recover arrears in taxes amounting to Rs. 107 billion indicated in the old Legacy computer system as at 31.03.2021 as soon as possible completing long pending judicial proceedings and collect taxes more efficiently, the Committee on Public Accounts (COPA) has revealed in a report.

Only a sum of Rs. 224 million has been recovered out of the Rs. 107 billion. COPA has indicated that the main issue was certain discrepancies in tax collection records in RAMIS and the old system during the process of changing to a new computer system from the previous old one.

It was revealed at a COPA meeting that the tax files pertaining to the tax period up to December 31, 2015 are under the control of the old computer system and from January 1, 2016 under the RAMIS computer system.

COPA has recommended that the provisions of the Inland Revenue Act be amended to expedite these long pending judicial proceedings and rectify existing bottlenecks.

The reluctance of the institutions such as Sri Lanka Telecom and the

Colombo Stock Exchange (CSE) to share data with the IRD and non availability of a unique identification number such as the national identity card number, or passport number in data sharing among institutions are of the highest priority out of those obstacles, it disclosed.

29 state institutions have been categorised under four levels of priority based on the significance of linking to the system and the linking of six institutions to the system has been finalised, the report observed.

A senior official of the IRD emphasised the importance of linking the People’s Bank and the Bank of Ceylon to the online system.

The difficulties cropped up in the process of linking of each institution to the system, he said quoting the officer representing the CSE at the COPA meeting as saying that if their institution is linked to the system, all investment institutions including the private and state banks should simultaneously be linked to the system.

COPA also pointed out the importance of linking state institutions with RAMIS including the Department of Motor Traffic, Land Registry Office, Department of Immigration and Emigration, Department of Census and Statistics, Department of Excise, Department of Registration of Persons, and Registrar General’s Department with the IRD for the tax collection process.

This should be done by giving high priority to data protection and mitigating risks as well as improving the knowledge of IT among relevant officials and it will be a time consuming procedure, COPA suggested.

The IRD official further stated that there were legal impediments to provide data on levying of fines by the

Sri Lanka Customs to the IRD, apart from that all data on importing and exporting were being provided to the system.

It was revealed that the linking of the Finance Ministry and the Department of Registrar of Companies to the system has already been completed.

COPA has recommended that the provisions of the Inland Revenue Act be amended to expedite these long pending judicial proceedings and rectify existing bottlenecks.