Write off Tax Arrears-28.09.2021

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

Taxes which it applies

The Commissioner General is required to write off taxes in arrears, for periods prior to December 31, 2020, in relation to the following taxes.

  • Goods and Services Tax Act , No 34 of 1996
  • Optional VAT imposed under section 25H of the VAT Act, No 14 of 2002
  • VAT advance payment deducted under section 26A of the VAT Act, No 14 of 2002
  • Economic Service Charge Act, No 13 of 2006 
  • ESC imposed under the Finance Act, No 11 of 2004
  • Nation Building Tax Act, No 9 of 2009
  • Debit Tax Act, No 16 of 2002
  • Social Responsibility Levy under Finance Act, No 5 of 2005
  • Turnover Tax Act, No 69 of 1981
  • Wealth Tax and Gift Tax imposed under the Inland Revenue Act of 1979
  • Surcharge on Wealth Tax and Income Tax (under the respective Acts)
  • National Security Levy Act, No 52 of 1991
  • Save the Nation Contribution Act, No 5 of 1996
  • The Commissioner General is required to write off any unpaid income tax of an individual as at December 31, 2020, whose assessable income calculated in terms of the Inland Revenue Act No 24 of 2017 does not exceed Rs. 3 million. The unpaid income tax can be in relation to income tax imposed under the Inland Revenue Acts of years 1979, 2000, 2006 or 2017. Unpaid income tax includes tax in default and penalties and tax deducted on employment income by an employer that remain unpaid. 

3.The Commissioner General is required to write off penalty and interest on payments that were due on or before December 31, 2020 under any of the following listed taxes, provided the tax payer pays the full amount of the tax outstanding before March 31, 2022.

  • Inland Revenue Act (Inland Revenue Acts of years 1979, 2000, 2006 and 2017 included)
  • VAT Act
  • Betting and Gaming Act
  • Stamp Duty Act and Stamp Duty Special Provisions Act
  • Finance Act, No 11 of 2002

Conditions 

The following will apply in relation to the write offs in relation to tax in arrears of the specified taxes, levies, duties and in relation to tax in arrears of individuals;

  • The write off will not apply if a decision is pending or has been made by the Tax Appeal Commission or a Court of Law prior the commencement of this Act
  • The write off will be off set against tax refunds that are due for any period prior to December 31, 2020

Process 

  • The Commissioner-General shall communicate in writing, to every taxpayer, the amount of refund to be set off against the tax arrears 
  • If such person is dissatisfied with the amounts of the refund to be set off against the tax arrears so written off, he shall within a period of fourteen days from the date of the communication of the Commissioner-General, make a written request to the Commissioner-General to not to set off the refunds against the tax arrears as specified by the Commissioner-General and shall settle the full amount of the tax arrears on or prior to March 31, 2022.
  • The Commissioner-General may, upon a request made by the taxpayer , grant approval to such taxpayer to settle the tax arrears on or prior to March 31, 2022, in accordance with a suitable payment plan submitted along with the request.
  • The Commissioner-General shall write off any interest or penalty on such tax arrears, if the taxpayer acts in compliance with the payment plan approved on or prior to the dates approved by the Commissioner General in such payment plan.
  • Where the taxpayer does not make a request  or does not settle the tax arrears according to the payment plan accepted by the Commissioner-General, the Commissioner-General shall proceed to set off the refunds against the tax arrears as specified.

 

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