Sri Lanka to give amnesty to those who broke tax laws or forex controls
ECONOMYNEXT – Sri Lanka will give an amnesty to businessmen who have hidden funds breaking tax or foreign exchange laws if the money invested in any scheme proposed by a budget for 2021, Prime Minister and Finance Minister Mahinda Rajapaksa said.
“For the benefit of the country, I request from all entrepreneurs to utilize the funds hidden locally or internationally in order to evade laws relating to taxes and foreign exchange,” Rajapaksa told parliament.
“It is expected to make legal provisions to provide a tax pardon to entrepreneurs thus utilizing funds for any investment facilitated by this budget under the payment of taxes amounting to 1 percent.”
Sri Lanka has forex controls due to a flawed Latin America style central bank which prints money and triggers forex shortages.
Most of the countries in which such central banks were set up by Federal Reserve money doctors in the style of Argentina’s central bank have ended up with import substitution and sovereign default as well as dollarization and re-denomination, analysts have said.
Sri Lanka discontinued to some taxes from the beginning of 2020, as part of a simplification of taxes and to give a ‘stimulus’.
Sri Lanka tax authorities will also close files of taxes.
“…[O]utstanding dues on the taxes such as the Economic Service Charge and the Nation Building Tax administered by the Inland Revenue Department are proposed to be settled through a mechanism which includes a concessionary payment plan based on the payment capacity leading to a full and final settlement resulting in the closure of the those files,” Rajapaksa said.
Other reliefs proposed are as follows:
Tax Relief Measures to Facilitate Post COVID – 19 Economic Recovery
(i). Consideration of the income generated from the supply of Health Protective Equipment and similar products by BOI companies on the request of Ministry of Health and Indigenous Medical Services, Department of Health Services, Tri Forces and Sri Lanka Police as “Deemed Exports” and to consider the said quantities for the calculation of 80% export requirement for the tax purposes, to become eligible for reduced tax rates.
(ii). Waiver of Income tax in arrears, payable by the SMEs as defined in the Inland Revenue Act, No. 24 of 2017, on the assessments issued up to the year of assessment 2018/2019 by the CGIR, where he is satisfied that there is no fraud or wilful neglect involved in the disclosure of income or any claim for any deduction or relief.
(iii). The income tax return furnished by the SMEs for the year of assessment 2019/2020 is proposed to be accepted and additional assessment not to be issued for that year on tax payers, who furnish the Income Tax Returns for the year and pay the tax declared in the Return.
(iv). A grace period is proposed to be granted to settle the taxes in arrears/default, as agreed with the Legacy Unit, Default Tax Recovery Unit and the Revenue Administration Management Information System (RAMIS) Unit of the Department of Inland Revenue.
(v). The payment or/and submission of the returns of any tax administered by the CGIR, which is due for the period from March 1, 2020 to June 30, 2020, proposed to be treated as paid or/and submitted on the due date if such payment/submission is made on or before December 31, 2020. (Colombo/Nov18/2020)