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IRD, Customs, Excise Department to collect GST

04 Feb 2022

 
  • Government bows down to pressure by trade unions
  • Announces intention to amend GST Bill
  By The Morning Business Desk  The Ministry of Finance has announced its intention to amend the Special Goods and Services Tax (Special GST) Bill providing for the collection of the Special GST tax by the Inland Revenue Department (IRD), Sri Lanka Customs, and the Excise Department instead of the newly established unit under the Ministry of Finance as previously envisioned, The Morning Business learns. The Attorney General’s Department presented to the Supreme Court of Sri Lanka, during the hearing of the petitions challenging the Special GST Bill yesterday (3), a letter from the Ministry of Finance signed by Ministry of Finance Secretary S.R. Attygalle, which stated that the Government intends to amend the Bill at the committee stage providing for the tax under the Act to be collected by the three tax collectors already in existence. On Wednesday (2), Attorney General’s Department Deputy Solicitor General (DSG) Nirmalan Wigneswaran in making his submissions to court, stated that the purpose of this Bill is to ensure efficiency in the collection of government revenue and to reduce interactions between persons or tax collectors during the tax collection process.  On the same day, Finance Minister Basil Rajapaksa said that if the trade unions are opposed to the idea of the newly gazetted Special GST being collected by one private bank account belonging to a Treasury official, the Government is ready to “change it to the original method”. “If the trade unions are unhappy with the taxes being collected by the Finance Ministry, we are ready to do it the old way,” Rajapaksa said, responding to a media question posed at an event held on Wednesday evening.  At this juncture, a legitimate question arises as to how this Bill will fulfil its purpose as set out by the DSG if the proposed amendments are given effect, because if the IRD, Customs, and the Excise Department are given the responsibility of collecting the GST tax, there appears to be no change in the existing status quo, which in turns brings into question the rationale in enacting this Special GST Bill.  Upon presenting this letter, the court was adjourned for one-and-a-half hours, allowing time for the DSG to obtain further instructions from the Ministry on what the exact amendments sought to be made are. However, he was unable to disclose what the exact proposed amendments were.  Therefore, the Supreme Court decided to proceed with the hearing based on the Bill as it is, as there is no guarantee whether or not the proposed amendments will be made or not.  This development will be welcome news to the IRD, Sri Lanka Customs, and the Excise Department, whose trade unions have been protesting against the Special GST for several weeks.  Speaking to The Morning Business, IRD Commissioner General H.M.W.C. Bandara stated that he believes that the issues of the employees of these tax collecting agencies have been resolved following this development. “They were asking that the tax collecting responsibilities not be granted to the newly created unit and this has been accomplished by the amendment,” he noted. This new Special GST Bill will impose a single Special GST on telecommunication, cigarettes, liquor, betting and gaming, and motor vehicle assemblers, manufacturers, importers, and service providers in lieu of the various taxes and levies imposed under different Acts currently. The Special GST Bill was approved to be presented to Parliament by the Cabinet on 3 January 2021 and was tabled in Parliament on 20 January along with the Value Added Tax (Amendment) Bill and the Personal Data Protection Bill. Under the Special GST Bill, the Finance Minister shall be empowered to determine the applicable tax, the basis of computing the tax, and exceptions to the tax by an order published in the gazette.  The imposition of the Special GST was first proposed in 2021. Following its enactment, the responsibilities of the IRD shall be limited to merely collecting income tax.


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