“Empower tax Ombudsman, pass Act in Parliament”

National Budget – 2023 proposals on appointing a tax ombudsman and a presidential commission on Taxation would result in the country’s tax policy making becoming more robust, KPMG Sri Lanka Principal, Tax and Regulatory, Suresh Perera said.

Reference to tax ombudsman in the budget is a welcome move, Perera said, adding that the same proposal to introduce a tax ombudsman was in the 2017 budget proposal as well.Noting that there was no proper constitution for this tax ombudsman to operate in the past, Perera said, “Tax ombudsman was not in a position to give any relief as he did not have legal enforceability due to lacuna in the framework, within which he was appointed.”Perera made these observations at a seminar held under the theme, ‘Budget Highlights 2023 – Analysis of Tax Proposals and Impact on Business, Economy and Society organized by CMA Sri Lanka.Perera said the tax ombudsman was created by a Cabinet paper in the past. The next tax ombudsman must be appointed by way of an Act passed in Parliament, defining his powers and the enforcement mechanisms.

“If that happens, shortfalls in the past will not be repeated .That should also have a proper succession from one ombudsman to another ombudsman which again was a lacuna in the earlier system.”

Speaking further, Perera stated that from the period starting from the month of May, certain tax changes were introduced both relating to income tax and VAT regime.

“That is the main reason why we do not see many tax changes being introduced in the 2023 budget and those rules are significant and ought to be implemented in a timely manner.”

Tax proposal on appointing a Presidential Commission on taxation to study and make recommendations on the functioning, coordination and changes to be made in the tax structure, the institutions, procedures and many others is a welcome move. According to Perera this shows the willingness of the Government to conduct a thorough study with regard to taxation in Sri Lanka.

“Most of us don’t have much faith in commissions with regard to the outcome of those commissions. I hope that it will not be the case here also.

I expect to see positive results coming from this tax commission which will benefit the tax regime as well as the Sri Lankan economy as a whole.

There is a lacuna in relation to the tax policy making process in Sri Lanka that we need to have a robust eco system in relation to this.

At the finance ministry, I think there should be a separate body or authority in charge of tax policy making.”