Tax principal at KPMG, Suresh R.I. Perera, says he hopes the Sri Lankan government will amend parts of the proposed Inland Revenue (Amendment) Bill following the Supreme Court’s determination on key provisions related to taxpayer liability and enforcement.

Perera said the Supreme Court had ruled that proposed Section 185A, which criminalises administrative failures, is constitutional.

“As per the Supreme Court, Section 185A, which criminalizes administrative failures, is constitutional. But there is hope that the government will change this section in favour of taxpayers during the committee stage amendments,” he said.

Perera also pointed out concerns surrounding proposed Section 163(4A–4H), which introduces a “certificate procedure” allowing action through the Magistrate’s Court.

“In relation to the new Section 163(4A–4H) that introduces the ‘certificate procedure’, where the Magistrate is prevented from even questioning the accuracy of the certificate issued by CGIR, the Supreme Court has provided an option to the government. Either pass it with a two-thirds majority or amend it to pass with a simple majority,” he said.

Under the proposed mechanism, the Commissioner General of Inland Revenue (CGIR) could issue a certificate against a taxpayer in default, allowing unpaid taxes to be treated as a fine and potentially leading to imprisonment.

Perera said he expects the government to follow the court’s observations despite having the numbers required to pass the provision unchanged.

“As we all know, the government has a two-thirds majority in Parliament. But since the Supreme Court has pointed out that imprisonment while taxes are under the appellate procedure is not correct, we expect the government to amend it as pointed out by the court and pass it with a simple majority,” he said.

“That is, if an appeal is pending, CGIR will not issue a certificate to initiate Magistrate Court proceedings,” he said. 

The Inland Revenue (Amendment) Bill is being taken up for second reading in Parliament on Wednesday. (Newswire)

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A comprehensive new bill aimed at overhauling Sri Lanka’s direct tax regime was published in the Gazette Extraordinary on 20 February 2026 and issued by the Minister of Finance, Planning and Economic Development on Tuesday (24 Feb). 

The proposed legislation, which seeks to amend the Inland Revenue Act, No. 24 of 2017, introduces a series of significant changes once it is enacted through the constitutional legislative process.

According to a Tax Flash released by KPMG in Sri Lanka, the amendments are designed to broaden the tax base, enhance compliance, and offer targeted relief, impacting individuals, corporations, investors, and a wide array of service providers.

Key proposed measures include:

• Revision of Capital Gains Tax Rates: Capital Gains Tax (CGT) rates are set to increase from the date of enactment. For individuals and partnerships, the rate will rise from 10% to 15%. A more substantial increase is proposed for trusts, unit trusts, mutual funds, and NGOs, where the rate will jump from 10% to 30%.
• One-Time Interest Relief on Outstanding Tax: In a move to encourage settlement of old dues, the Commissioner General will be empowered to waive interest accrued on underpayments and late payments up to 31 March 2023. This relief, applicable to liabilities under the Inland Revenue Act, Surcharge Tax Act, and Debt Repayment Levy, is conditional upon the full settlement of the principal tax and any applicable penalties within six months of the Act’s enactment.
• Simplification of Instalment Tax Payments: Effective 1 April 2026, the process for tax instalments will be streamlined by removing the requirement to file a Statement of Estimated Tax (SET). Instead, instalments will generally be calculated based on the taxable income of the immediately preceding year. Flexibility will be provided for instances where the prior year’s income was nil or where the current year’s income is expected to be materially lower.
• Acceptance of Individual Returns Without Further Assessment: For the year of assessment commencing 1 April 2025, a new fast-track mechanism will be introduced. Qualifying individuals who declare and pay tax on at least 120% of the prior year’s taxable income, make full payment without claiming a refund, and submit a prescribed affidavit confirming compliance will have their returns accepted as filed, with no amended or additional assessment issued.
• Expansion of Withholding Tax (WHT) Scope: The list of service providers subject to a 5% withholding tax will be significantly expanded from the date of enactment. The new categories include auditors, valuers, personal trainers, coaches, entertainers, photographers, therapists, beauticians, social media specialists, brand ambassadors, and debt collectors, among others.
• Other Important Reforms:
  • Enhanced capital allowances for qualifying investments, subject to Board of Investment approval.
  • Updated rules on qualifying payments, deductions, and residency.
  • Specific provisions affecting the insurance sector, unit trusts, mutual funds, and the treatment of salary arrears and cancelled contracts.
  • New tax administration and enforcement measures.

The provisions outlined in the bill will only take effect upon enactment and on the respective dates specified in the final Act.

KPMG Sri Lanka recommends that businesses, investors, high-net-worth individuals, and tax professionals review the proposed changes in detail to assess their potential impact. (Newswire)

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The KPMG Sri Lanka Academy has organized a Virtual Assembly on “Colombo Port City -Discussion on the key incentives and the processes” on 6th September 2023 at 3:00 PM. 

Mr. Reyaz Mihular – Chairman, SLT PLC & Bairaha Farms & Commissioner, Colombo Port City Economic Commission and Mr. Revan Wickramasuriya – Chief Operating Officer, Colombo Port City will share their insights at the panel session.  

The presentation on port city incentives will be done by Mr. Suresh Perera – Principal, Tax & Regulatory. The panel session will be moderated by Ms. Rifka Ziyard- Principal, Tax & Regulatory. 

For more details and registrations please contact Seneli on sjayatunge1@kpmg.com or 077 444 6649. 

The post Webinar organized by KPMG on “Colombo Port City” on 6th September appeared first on Newswire.

If you are interested in staying current on interest-related direct and indirect tax rules and issues you may join the upcoming webinar on the 9th of June on “taxation of interest”, organized by KPMG Academy where the speakers will explain the specifics of how taxes affect interest and offer tips on how to get the most out of them. 

The expert speakers will cover topics such as

– The definition of interest 

– income tax, VAT & SSCL issues pertaining to interest income received by holding companies, banks and other financial institutions 

– Tax deductibility of various types of interest expenses & Thin capitalization rules – Withholding tax on interest 

– Tax issues pertaining to inbound & outbound interest along with the impact of Double Tax treaties 

– Financial VAT & interest 

– Case law involving interest 

Ms. Hasna Hassan – Director and Ms. Radhini Thomas – Associate Director will join Suresh R. I. Perera, Principal to dissect these fascinating issues. For registrations and inquiries contact Seneli at 0774446649 or sjayatunge1@kpmg.com 

The post Webinar on “Tax & Interest” appeared first on Newswire.

An Inland Revenue Amendment Bill to amend the Inland Revenue Act No. 24 of 2017 (Income Tax Act) was issued on 16th March 2023. The Bill contains amendments across many areas such as new exemptions, limitation of time for exemption granted in 2021, withholding of taxes, relief for penalty and interest, changes in refund mechanism, Mandatory Electronic Return filing, administrative measures in related to appeals, collection of information, recovery etc

A revised circular has been issued  dated 17th March 2023 instructing to all Licensed Commercial Banks and Authorized Dealers engaged in outward remittances and persons who make outward remittances on the tax clearance process related to withholding of taxes from outward payments. Certain revisions are introduced to the negative list. 

The KPMG Sri Lanka Academy has organized a Virtual Assembly to discuss the latest “Inland Revenue Bill issued on 16.03.2023 & the revised circular on outward remittances and related procedure dated 17th March 2023”. The webinar is scheduled on the 27th of March 2023 (Monday) at 3.00 PM

This webinar will shed light on the latest changes to the Income Tax and Withholding Tax regime and the presenters will discuss on finer points that one needs to consider in understanding the impact stemming from these proposed changes.

The session will be conducted by Mr. Suresh Perera – Principal, Ms. Rifka Ziyard – Principal and Ms. Hasna Hassan – Director, Tax and Regulatory at KPMG Sri Lanka. For registrations contact Seneli at 0774446649 or sjayatunge1@kpmg.com

The post KPMG Academy organizes discussion on the Inland Revenue Bill 2023 & the circular on outward remittances on the 27th March at 3.00 PM appeared first on Newswire.

The KPMG Sri Lanka Academy will be conducting a Virtual Assembly to dissect the “New employment benefit valuation rules” on the 14th of February 2023 (Tuesday) at 3.00 PM.

The CGIR issued a revised benefit valuation circular dated 7th February 2023 and this circular seeks to annul the previous circular issued in December 2022.  

The analysis of the rules from the newly revised benefit valuation is vital since adjustments need to be carried out in the monthly APIT calculations (in order to comply with the circular from 1st January 2023). 

The benefits covered in the circular include transport, accommodation, vehicle driver, fuel, shares from the employer, concessionary loans, medical benefits, communication facility etc. Certain benefits have been introduced specifically for public sector employees. 

The session will be conducted by Mr. Suresh Perera – Principal, Ms. Rifka Ziyard – Principal, Tax & Regulatory at KPMG Sri Lanka. The discussion will provide insights into the structuring of the remuneration package.

For registrations contact Seneli at 0774446649 or sjayatunge1@kpmg.com

The post KPMG webinar on 14th February to dissect the non-cash benefit rules related to employment appeared first on Newswire.

KPMG, one of Sri Lanka’s leading business consulting firms, has published a synopsis of the recently issued revised circular pertaining to non-cash benefits provided in employment for employees. 

As per the revised circular issued by the Department of Inland Revenue, the benefits primarily include company shares, residence, transport facilities, communication facilities, and non-cash benefits provided to an employee.

The synopsis of the revised circular by KPGM is as follows:

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