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)