The Hon. Nimal Palihena

¶ 01 Hon. Deputy Speaker, we debate amendments to the Inland Revenue Act, No. 24 of 2017. Economic development is tied to revenue generation; income tax is a key direct tax. Indirect taxes hit everyone, but our base of direct taxpayers is relatively small. Our aim is to enhance compliance while providing a fair legal foundation.

¶ 02 The Opposition is spreading fear. We invite the public to study these amendments carefully and see how they actually affect you. In the public sector, PAYE ensures taxes are withheld. But there is a segment outside the net; they too have responsibilities toward national development. We aim to bring them in with fairness. Studies on compliance have highlighted: lack of a simple, stable regime; low public awareness; audit and legal enforcement gaps; and, critically, a lack of public trust. People ask what was done with taxes historically. We must make the system fair, transparent and tech-enabled.

¶ 03 Some key measures: - The enhanced capital allowance threshold previously at USD 3 million is reduced to USD 250,000—extending benefits once enjoyed only by large investors to SMEs, allowing them to deduct capex against tax from year one. - On enforcement, clauses provide that if returns are not filed or a person fails to appear when required, cases and fines follow. Laws must have strength; this is to motivate compliance, not to extract revenue through punishment. - Every citizen has a duty to pay fair taxes relative to income. Previously, individuals/partnerships faced 10 percent capital gains tax while companies paid 30 percent corporate tax; we are rationalizing CGT for individuals/partnerships to 15 percent.

¶ 04 Do not fear taxes; if assessments are accurate, pay the right amount in an orderly way. If you paid at least 20 percent more than last year’s tax, you will enjoy relief from further scrutiny—building trust.

¶ 05 On RAMIS: contrary to claims, RAMIS is integrated with banks, Sri Lanka Customs and many state institutions, providing unified data to strengthen Inland Revenue’s collection function. These reforms will better support development and revenue generation.

¶ 06 Thank you.