Wednesday, March 9, 2016

Advice to the Commissioner General of Inland Revenue

This is to Madam Kalyani Dahanayake the Inland Revenue Department Head – to request permission from the Treasury to publish a circular and print in all newspapers forthwith.

I have made what I believe are sensible suggestions for immediate implementation so that the Government’s Tax Base is increased rapidly in order to collect a reasonable amount of taxes.

Another one is the taxing of vehicles provided by Companies or Leased by Companies for their staff, no matter what form this lease takes.

Taking the tax year 2016/2017 that is fast approaching, and NO ONE knows what the taxation is, it is in order to include the following to the 17.5% rate that the PM just announced.

All company vehicles assigned to an employee or director to be taxed at a flat monthly rate of Rs100,000 (added to income) for vehicles registered after 1st January 2011, and for all vehicles registered for the first time before that date, a flat Rs50,000 a month, no matter what the value of the vehicle is!

This will make it very simple. One computer can look at ALL vehicles registered to companies in the whole Island, and mark, who is using it, so that a database of tax payers can quickly be set up, where the company is asked to supply the name of the person who is being assigned this vehicle, and if they are common to the Company itself, with NO specific person being allocated.

Start with those that are only Motor Cars, Double Cabs and SUVs for this year, and later can be extended to Vans etc, once better data on usage is gathered from the Computer Program as mentioned aforesaid.

Remember that a person earning Rs100,000 who has been given a company car that has been registered in the past 5 years, will be deemed to be on an income of Rs200,000 a month from April 2016. Annualized to Rs2.4M. As the exemption is Rs2.5M he will NOT be paying any tax on this benefit, it is only when the threshold is reached will they be paying the flat 17.5% on any amount above the threshold. So that is fair.

Under the same basis above, ALL Government Servants MUST also be subject to tax like everyone else, and in any case only those whose package exceeds Rs200K a month will in any case be subject to making a tax payment. This will then be fair by all, and start yielding some income tax immediately, when so many people fall off the tax-paying list as a result of the high thresholds! which are in place for the year 2016/2017.

Surely this is fair, and should not result in any confusion, or refusal by any segment of the population.

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