Additional Classes of Persons Required to Register as a Tax Payer

A gazette notice dated 31st May 2023 has been issued under S102(3) of the Inland Revenue Act. Section 102 provides who are liable to obtain a TIN (Taxpayer Identification Number) registration. Accordingly, the following classes of persons are required to obtain a TIN Number with effect from 1st of June 2023.

Members of the following Professional Bodies

  • Medical Practitioners (Registered with the Sri Lanka Medical Council.)
  • Members of the Institute of Chartered Accountants of Sri Lanka (ACA/FCA)
  • Members of the Institute of Certified Management Accountants of Sri Lanka (ACMA/FCMA)
  • Members of Institution of Engineers of Sri Lanka
  • Members of the Association of professional Bankers Sri Lanka
  • Members of the Institute of Architects Sri Lanka
  • Members of the Institute of Quantity Surveyors Sri Lanka
  • Attorneys at Law of the Supreme Court of Sri Lanka

Owners of Sole Proprietorship/Partnership Businesses, Lands, Buildings or Vehicles

  • Persons who have registered a business in Divisional Secretariats
  • Persons who have registered a vehicle in the Department of Motor Traffic (other than three wheelers, motor cycles and hand tractors)
  • A person who has purchased or acquired immovable property in Sri Lanka through a transfer deed on or after April 1st 2018
  • Any individual who obtains approval for a building plan from a local authority.

Individuals with earning above 100,000 per month

  • Any individual who receives a payment of Rs.100,000 per month or Rs. 1,200,000 per annum for providing any services in Sri Lanka.
  • An employee whose contribution for EPF is more than Rs.20,000 per month (including both the employees and employers contribution)

Any individual above the age of 18 years

With effect from 1st of January 2024 any individual who has reached 18 years of age or more as at 31st December 2023 or who will reach the age of 18 on or after 1st January 2024 are required to register a TIN Number even though they do not belong to the above mentioned categories (professional/others)

IMPLICATIONS

Under S102(1) every person who is liable to furnish a return of income only had to register with the Commissioner General within 30 days after the financial year end. As per S 126 (1) every person chargeable with income tax under this Act shall furnish a tax return. Therefore, hitherto only persons having an annual income of 1,200,000 per year had to register for a TIN No. Further employees under PAYE /AIT schemes were not required to obtain a TIN Number. However, with the above regulation the persons coming under any of the above categories are expected to obtain a TIN No irrespective of whether their income was above or below 1,200,000. Further persons employed with a monthly salary of above 100,000 also need to obtain a TIN No even though their Employer is deducting his taxes under the AIT scheme. The obtaining of the TIN number should be done within 30th of June 2023.

However, with effect from 1st January 2024 all those above 18 years must also obtain a TIN No. even though they do not belong to any categories mentioned above.

NON DEDUCTIBILTY OF CERTAIN PAYMENTS MADE IN CASH

Inland Revenue (Amendment) Act No 4 of 2023 introduced provisions to encourage cashless payments. Therefore, with effect from 8th May 2023 any below mentioned payments made in cash will not be allowed to be deducted as an expense by the payer or to be added as cost of an asset of his for tax purposes.

What are the types of payments

A person paying to another person a sum of money amounting in the aggregate to Rs. 500,000 or more

  • In a day or
  • In respect of a single transaction (ie purchase of goods or services on a single invoice, receipt or statement) or
  • In respect of a series of single transactions relating to one event

What are the allowed methods of payments for payments identified above.

Only the following payment methods are allowed

  • Account payee cheque
  • Account payee bank draft
  • By use of credit card
  • By use of debit card
  • By electronic payment system through a bank account

The following payments are exempt from the above requirements

  • Any payment by the government of Sri Lanka
  • Any payment by any government institution of Sri Lanka
  • Any payment by bank or financial institution

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