The government has not presented tax amendment bills in parliament and some tax relief initiatives have not been enacted up to now, but the Inland Revenue Department (IRD) is enforcing some of these new amended taxes hoping to get approval from parliament with retrospective effect.
While the Pay-As-You-Earn or PAYE out of employment income has been abolished under the new tax relief, it still continues administratively as there was no directive from the IRD to remove the tax due to confusion on its legality
Once the PAYE is abolished, all individual taxpayers are required to pay income tax on those incomes too provided the total income is higher than Rs. 250,000 per month or Rs. 3 million per annum, he added.
The new government at the first cabinet meeting itself agreed to grant tax concessions in order to provide relief to the public.
Accordingly, the government’s first relief package has provided several direct tax concessions, which will go into effect from January 1.
This matter will be rectified after the election of a new government in April, he said. The tax free threshold of the employment income of all public and private sector employees for the purpose of the PAYE tax was increased from Rs.100,000 to Rs.250,000 per month.
The excessive personal income will be liable for income tax at the progressive rate of 6 per cent for each additional income of Rs.250,000 per month.
The Economic Service Charge (ESC) and Nation Building Tax (NBT) have been abolished and the tax payers have already stopped the payment of these taxes although the necessary bills have not been enacted in Parliament.
However the VAT reduction on all goods and services to 8 per cent from 15 per cent has no issue as it is being implemented following the due process.
Debit Tax on banking of financial institutions, capital gains tax on stock market transactions, and VAT on condominium property have all been removed.
The Telecommunications Levy has also been reduced by 25 per cent, while foreign currency earnings have been exempted from income tax.
While cabinet approval has been granted to all these tax revisions, the enactment in parliament by issuing relevant gazette notifications is still pending making the revenue collection more difficult for the IRD,
(LI)