New Excise Act by December

  • Excise Ordinance and Tobacco Act to be combined
  • RAMIS-like system for Excise Department
  • Coming into effect in January 2020

By Madhusha Thavapalakumar

The Government is in the process of introducing a new Excise Act by the end of this year which will be an amalgamation of the existing 100-year-old Excise Ordinance and Tobacco Tax Act, with a completely digitalised platform.

Under this revamp, the Excise Ordinance along with 1020 Excise notifications and 2,500 circulars would be updated to cater to modern-day requirements and be merged with the Tobacco Tax Act, The Sunday Morning Business learns.

If implemented, this would create a single legal framework to govern both the liquor and tobacco industries of Sri Lanka, an official at the Department of Excise told The Sunday Morning Business.

According to the official, the new Excise Act will incorporate world-class best practices in terms of the expansion of the excise tax revenue base, simplify tax rates, and introduce new technologies.

It would also improve the excise revenue management system, as the Department of Excise would adopt a digital system for revenue collection similar to the Revenue Administration Management Information System (RAMIS) of the Department of Inland Revenue. The tender for this project would be called soon.

Sources noted that the whole revamping process is being funded by the World Bank as it is an expensive undertaking. For example, the development of a digital system which would address the loopholes in excise tax collection alone would cost over $ 7 million. Under this digital system, the Department of Excise hopes to issue liquor licenses online, reducing face-to-face interaction. In addition to this, the excise tax structure would also be simplified and the tax base would be expanded to increase the excise revenue.

Moreover, stakeholders, police stations around the island, and tourist hotels will be interlinked for improved monitoring of supply chains while manufacturers, consumers, and liquor license holders would be able to obtain data and information including the types of licenses, prices, and regulations on one platform.

The new Excise Act is at the preliminary drafting stage at the moment where two committees are amending the Excise Ordinance along with the Excise regulations and notifications in consultation with the University of Moratuwa, which is specifically focusing on the digitisation process.

Subsequently, stakeholder comments will be obtained and incorporated in the final drafting of the Bill which will be sent to the Cabinet for its approval and will then be submitted to Parliament by December this year. According to the official, the new Act will come into effect by January 2020. The Budget 2019 proposed amending and updating archaic and regressive rules and laws of Sri Lanka which include Sri Lanka’s Excise Ordinance. The Ordinance was introduced in 1912 and the Department of Excise was established in 1913.

Since then, the Ordinance has been amended 25 times. However, there has been virtually no digitisation over the years. Therefore, the new Act is expected to be on par with international excise laws, particularly in terms of digitalised and expedited services.

Addressing the media, two weeks ago, Minister of Finance Mangala Samaraweera noted that the Existing Excise Ordinance was brought in during Queen Victoria’s regime and therefor,e the mentality of the Ordinance still belongs to early 19th Century.

“If we continue with this Act, the officials at the Department of Excise will keep getting richer while the illicit liquor brewing increases day by day,” Samaraweera noted.

The new Act is expected to increase the excise revenue of Sri Lanka more than that of 2019 targets. According to the Ministry of Finance, the excise revenue target in 2019 was Rs. 130 billion, but it had only reached Rs. 68 billion as at the end of July this year.