The government’s latest amendments to the Tax Appeals Commission (TAC) law have come under fire from the business community, with growing concerns about its efficiency and fairness in resolving taxpayer grievances.

This week, a representative of a leading blue-chip company questioned the sustainability of the proposed changes, pointing to a lack of transparency, clarity and uniformity in tax assessments carried out by the Inland Revenue Department (IRD).

As part of the 2025 Budget, the government this week announced a series of proposed changes to the TAC law, including the introduction of mandatory deposits before filing appeals and an increase in fees for tax filing appeals.

Key amendments include increasing the fee for referring a case to the Court of Appeal to Rs. 10,000 and the fee for filing an appeal to the TAC to Rs. 15,000.

In addition, taxpayers challenging an assessment will be required to deposit 25 percent of the disputed tax amount, along with a penalty and interest, into a special account opened by the Commissioner-General of Inland Revenue.

“None of the proposals make it clear what happens if the TAC rules in the taxpayer’s favour,” said Nisreen Rehmanji, head of corporate finance and group tax at John Keells Holdings.

Speaking at a post-budget forum organised by the Institute of Chartered Accountants of Sri Lanka this week, she noted that under the new amendments, taxpayers will not only have to pay a portion of the tax they are disputing, but also interest and a penalty before being allowed to voice their grievances.

The majority of Sri Lanka’s tax revenue comes from self-assessments, and since most taxpayers comply voluntarily, the amendments raise serious concerns about the sustainable growth of national tax revenue.

Rehmanji also highlighted the unfairness of the tax system, pointing out that Sri Lanka has one of the highest per capita tax collections, meaning that taxpayers here contribute significantly more than their fair share to the government’s tax revenue.

“Therefore, this voluntary tax-paying population, which is already being taxed repeatedly, is very likely to be subjected to futile assessments,” Rehmanji said.

She explained that the problem is further exacerbated by systemic inefficiencies, such as the IRD’s inability to release key data needed to hold tax administrations accountable.

Rehmanji suggested that critical data points, such as how many assessments have been decided in favour of taxpayers, could be published to improve administrative transparency, encourage voluntary compliance and reduce tax evasion.

“Data should tell the story and this data is crucial for change. “This is what digitalisation should capture.” But how you use this data is also important,” said Rehmanji.

Dr. Nishan de Mel, Executive Director of the Verité Research Institute, echoed similar sentiments. He warned that although the International Monetary Fund has developed key performance indicators for several government agencies, there is a decline in publicly available tax data.

He noted that there has been a strong trend for years of tax-related and technology-related data reduction, with administrations avoiding releasing essential information that the public could previously access.

“This is a trend that we must strongly reverse, because it is part of the integrity promise made by the government,” De Mel said.