Reforms in Tax Administration – IRD & Customs

Inland Revenue Department
• Redrafting of Inland Revenue Act will be completed and policies for higher compliance and broadening the base will be incorporated. Anyone who will avoid or violate will be dealt stringently. Tax Manual also will be published.

• E-commerce presents a major challenge for tax administration, given the multijurisdictional nature of transactions. A mechanism will be developed to tax these transactions.

• IRD Administration will be decentralized to allow the tax authorities to be closer to the tax payer. Collection of taxes, fees and levies will be ensured by the deployment of IRD officers on electoral basis. A revenue monitoring unit will be established in the General Treasury.

• Revenue are collected through the officers already deployed at Divisional Secretariats.

• RAMIS will be fully implemented and a virtual office setup which allows no physical interface between IRD officials will be formed.

• The time frame for assessments, appeals and Court proceedings will be reduced and the Tax Appeals Commission will be strengthened by increasing the membership and filling vacancies.

• VAT Law enacted in 2002 has not been consolidated thereafter leaving the provisions difficult to be understood by users. Therefore steps will be taken to consolidate the VAT Act incorporating amendments up to date.

• Post refund audits upon obtaining bank guarantee, will be implemented in order to minimize delays in the VAT refund process

• Smart e-invoice devices will be introduced to be used at the point of sale by the VAT registered persons. This will make the VAT collection process more simple and efficient. This system will be extended to the Excise Department as well.

• National Tax Council will be established and the Office of Tax Ombudsman will be created by an Act of Parliament to resolve grievances of tax payers with the view to increasing tax payer confidence in the tax system and to avoid litigations.

• Steps will be taken to ensure the benefits and recognition proposed in the previous Budget are given to the privileged tax payers and three types of privilege cards, Platinum, Gold and Silver will be issued for them.

 

Sri Lanka Customs (SLC)

• Registration of all importers with the Customs Department, so as to grant them with appropriate levels of facilitation in the clearance process. This will be effective from 1st January 2017.

• Create risk profiles of importers which will help the low risk importers expeditious clearance.

• Pre arrival processing – submission of import documentation and information, including Manifest for processing before the arrival of the goods will ensure faster clearance and release once the goods reach the port. This will ensure just in time delivery of goods for compliant importers.

• Average time of clearance and release – in order to ensure predictability Customs Department will endeavor to publish average processing time of imports and export documentation and average release time of goods. The Customs Department will ensure that export documents and containers will be processed by the Department of Customs for shipment within 2 hours from the time of submissions at the exports facilitations Centre. Ensure that the documentation pertaining to imports will be processed in 3 hours and the containers released within 24 hours.

• Dry-port clearance – We will also explore the possibility of establishing dry ports on PPP basis.

• Valuation database – Customs value of imported goods for duty purposes are based on the transaction value as per the WTO Valuation Agreement. Thus in order to ensure uniform application ascertaining the actual transaction value of imported goods, Customs Department will establish a valuation data base with effect from 1st January 2017, for about 700 commonly imported goods with corresponding minimum values, which can be used as reference values to process clearance of imported goods.

• Advance Rulings – In order to ensure predictability of taxes payable on importation, Customs issues advance rulings, which will now cover origin of goods as well.

• Compliant Traders to be rewarded- Customs will accord the green channel facilities for documentary checks and documentary and goods examination to compliant traders.

• Publication and availability of information – in order to ensure transparency in Customs practices and procedures, the Customs Department will establish and implement a National Trade Information Portal in Sri Lanka.

• Single Window – Customs has already taken the initial step of enabling traders to submit documentation or data requirements for importation, exportation or transit of goods electronically through a single entry point to the participating authorities or agencies.

• Installing a Container Scanning system at the Ports and the airport to ensure, effectiveness and efficiency of the container and baggage clearing process, which will minimize delays and enhance government revenue collection.

• To curb smuggling activities through sea, the Customs Department will reactivate the Marine division. As such to strengthen Customs allocate Rs.250 million to procure 6 new Sea Patrol crafts.