Tax reforms need parliamentary sanction - Inland Revenue Department
by Rukshana Rizwie
An increase in the Value Added Tax (VAT) from 11 to 15 percent this
week, cannot be implemented through a newspaper advertisement or a
circular, because tax reforms need to be sanctioned by a Parliamentary
vote and gazetted, officials at the Inland Revenue Department told the
Sunday Observer.
A senior official at the IRD who wished to remain anonymous, said the
change in tax rates in certain sectors, cannot be amended and
implemented through a circular without amending the relevant Act.
We spoke to Senior Deputy Commissioner General of Tax Policy M.G.
Somachandra who echoed similar sentiments, saying that many private
entities and individuals have been calling the IRD for clarifications.
"We are aware that healthcare services are exempted but we've been
asked by private hospitals as to whether they should tax meals provided
to in-patients," he said. "The answer is yes, but the enforcement of
this is far more complex,"he said.
The Ministry of Finance made VAT amendments from 11 to 15percent,
beginning May 2. The threshold for the registration of VAT is stipulated
at Rs.3 million per quarter or Rs.12 million per annum.
A spokesman for the Department of Fiscal Policy at the Ministry of
Finance and Planning said the hike in VAT was merely an amendment to the
Act.
"The document is with the legal draftsman who will submit it to
Parliament. When the Minister presented the proposal in Parliament, it
was mentioned that the amendment would come into effect from May 2."
When asked whether it would be taken up for debate, the official said
if it was called for debate, it would certainly be taken up. Meanwhile,
National Freedom Front leader Wimal Weerawansa told Parliament that that
he would take legal action, against what he termed the illegal increase
of VAT by the government.
He said the government cannot increase taxes by gazette notification
or a circular. Changes have to be approved by Parliament. |