IMF looks forward to final IRA version

International Monetary Fund (IMF) is looking forward to the final version of the new Inland Revenue Act (IRA) to fully evaluate the proposed taxation framework while holding back the third tranche of US$168 million out of the total $ 1.5 billion extended fund facility to Sri Lanka.

IMF’s endorsement for the government's economic strategy and its extended fund facility is essential to give the relevant buffer for Sri Lanka a safety net in the backdrop of dwindling foreign reserves, an eminent economic expert said adding that it was at US$5.8 billion last month.

“Our legal experts are still in discussion with the authorities on amendments made in the pro- posed IRA, and the government authorities are yet to finalise the act enabling them to arrive at a consensus on the release of the third tranche of $168 million,”a spokesperson of the IMF Press Office in Washington told the Business Times.

However the IMF welcomed the authorities’ intention to simplify the IRA, broaden the income tax base, and provide certainty to taxpayers on the basis that the new taxation framework will be aligned with international best practices, she said in an e-mail communiqué.

The staff- level agreement on the release of funds is subject to the completion of a prior action of enacting the IRA by the authorities and the approval of the IMF Executive Board, which is expected to be considered in June 2017.

The recent changes, made by the Legal Draftsman as per instructions given by high authorities, provide for exemptions in IT, tourism, agriculture and export sectors, a move frowned on by the IMF.

IMF’s endorsement for the government's economic strategy and its extended fund facility is essential to give the relevant buffer for Sri Lanka a safety net in the backdrop of dwindling foreign reserves, an eminent economic expert said adding that it was at US$5.8 billion last month.