The Inland Revenue Department (IRD) has set up a dedicated office called the High Wealth Individuals Unit (HWIU) to ensure tax compliance of highly wealthy individuals as part of efforts to restore fairness and confidence in the country’s tax administration. The ten-member unit, which is located at the Large Taxpayer Office of the department, will [...]

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IRD gets tough with Lanka’s richest 100

Special unit set up to ensure tax compliance by highly wealthy individuals and to work with them
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The Inland Revenue Department (IRD) has set up a dedicated office called the High Wealth Individuals Unit (HWIU) to ensure tax compliance of highly wealthy individuals as part of efforts to restore fairness and confidence in the country’s tax administration.

The ten-member unit, which is located at the Large Taxpayer Office of the department, will be contacting a select number of wealthy individuals and will work with them and their advisors to ensure that they are up to date with their filings of tax returns as the first step, Commissioner General W.A. Sepalika Chandrasekara said in a statement.

To make sure the wealthy contribute their fair share and pay the right amount of taxes, the department said it would be conducting additional risk assessments and profiling of wealthy taxpayers, while conducting audits on cases that have the highest risks as well. The statement said the department would collaborate with both domestic and international organisations to access information that would help the HWIU to identify potential tax non-compliance.

The IRD would also be working closely with banks, the Financial Intelligence Unit (FIU), and other tax administrations through its extensive treaty network with 45 countries to identify wealthy individuals’ banking records and assets that might not have been disclosed, the statement said.

“Through this engagement approach, we hope to enhance their willingness to participate and contribute to the government’s revenue collection efforts to overcome the critical socio-economic issues confronted by the country,” the statement said.

Since there is no clear definition of HWI currently, the IRD is planning to identify a group of 100 taxpayers with the highest reported income from various streams, reviewing other sources of data, including third-party data such as real estate, Financial Intelligence Unit (FIU) reports, bank account details, and information from treaty partners.

The department said that as this work progressed, other individuals would be added to the group for review and ongoing monitoring.

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