The Bill containing the new tax amnesty will be out soon and presented to Parliament to give legal effect, the Government announced yesterday.
The Cabinet of Ministers gave its consent to this move at its meeting on Monday. The Gazette follows the Cabinet in February giving the go ahead to draft the legislation known as the Finance Act 2021.
In the 2021 Budget, Prime Minister Mahinda Rajapaksa who is also the Finance Minister proposed a tax amnesty on the condition of a 1% ‘Tax on Voluntary Disclosure’.
The move was to encourage people to disclose and invest undisclosed income and assets.
The 2021 Budget proposed to impose legal provisions to exempt such investors from the obligation to pay taxes, penalty or interest, free from investigation or prosecution subject to 1% tax.
“For the benefit of the country, I request from all entrepreneurs to utilise the funds hidden locally or internationally in order to evade laws relating to taxes and foreign exchange,” Rajapaksa told Parliament in November last year during the presentation of the 2021 Budget.
In February the Inland Revenue Department said that no assessment would be made, no penalty imposed and no action initiated under penal provisions of any Act administered by the Commissioner General of Inland Revenue on or after 1 January 2021 to qualifying persons.
They are those who have 1) earned money from any source and such person has not declared or not paid the due taxes to the Commissioner General as required by such enactments; and 2) utilises such money hidden in Sri Lanka or outside Sri Lanka as investments on any undertaking in Sri Lanka during the period from 1 January 2021 to 31 December 2021; but subject to the payment of 1% of final tax to the Commissioner General on the gross investment amount.
“Such persons are required to make a declaration to the Commissioner General in an approved form with their investment plan,” IRD said.
The 1% tax will be paid immediately as instructed by the Commissioner General. The IRD will issue separate guidelines in this regard shortly.
(FT)