The insights of Tax Amnesty-15.09.2021

The insights of Tax Amnesty as per Finance Act, No 18 of 2021 which was certified on 15th September 2021.

Persons to whom it applies 

To any person who has not disclosed any amount of taxable supply, income or asset which was required to be disclosed  in a Value Added Tax Return for any taxable period ended on or prior to March 31, 2020 or in a return of income for any year of assessment ended on or prior to March 31, 2020.

Persons to whom shall not apply 

• any person in relation to whom investigations or legal proceedings under the provisions of any law  is pending, in relation to any undisclosed taxable supply, income or asset;
• any person who has been convicted of an offence under the provisions of any law specified (Schedule II) in relation to any undisclosed taxable supply, income or asset; or
• any amount of undisclosed taxable supply, income or asset held by any person, in respect of which an assessment under the provisions of any respective law (Schedule I or Schedule IV)  has been made:

Qualifying conditions 

Invest the undiclosed amount in any of the following prior to March 31,2022

• shares issued by a resident company
• treasury bills or treasury bonds issued by the Central Bank on behalf of the Government of Sri Lanka
• any quoted debt securities issued by a resident company in Sri Lanka; or
• any movable or immovable property in Sri Lanka

where he is unable to immediately invest such amount available in cash whether in Sri Lankan rupees or in foreign currency, he shall deposit such amount in a bank account, on or after the date of commencement of the Act(15th September 2021) but prior to March 31, 2022.

Payment of Tax on voluntary Disclosure

A person to who intends to disclose an undisclosed amount is liable to  pay tax at a rate of 1% of the undisclosed amount,or on the cost of the asset invested or deposited.

Administrative Procedure 

• For the effective implementation of the provisions of the Act, the Commissioner-General may issue necessary guidelines specifying the manner of payment and filing the declaration within one week of the date of coming into operation of the Act.
• Upon receipt of a declaration ,the Commissioner-General shall verify whether such declaration is in accordance with the Act.
• Where the declaration is in accordance with the Act, the Commissioner-General shall accept the declaration in writing and inform of such acceptance to the declarant within thirty days of the date of receipt of the declaration.
• If the declaration is not in accordance with the provisions of the Act, the Commissioner-General shall reject the declaration and inform the declarant in writing the reasons for his rejection within thirty days of the date of receipt of such declaration.

Secrecy 

The Commissioner-General or any officer of the Department of Inland Revenue, shall preserve and aid in preserving official secrecy in respect of the identity of a declarant and any matter or thing contained in a declaration made under  the Act.

Source :Finance Act, No.18 of 2021