The Cabinet has approved the proposal to initiate the necessary amendments to the Inland Revenue Act No. 24 of 2017 to make it mandatory to provide a Tax Identification Number (TIN) when opening all types of bank accounts.
Due to the levy of advance income tax even from individuals whose annual income does not exceed Rs. 1.8 million, which is the annual income threshold for tax collection, legal provisions were introduced to increase the withholding tax rate from 5% to 10% by the Inland Revenue (Amendment) Act No. 2 of 2025, effective from April 1, 2025.
This step was taken as it was seen that depositors and low-income individuals were facing inconvenience.
As a solution to the problem, it has been proposed to introduce a system for submitting a self-declaration by individuals whose income is less than the tax-free margin.
Accordingly, the Cabinet has approved the proposal submitted by the President in his capacity as the Minister of Finance, Policy Planning and Economic Development to make the necessary amendments to the Inland Revenue Act, No. 24 of 2017, to exempt all domestic depositors with an estimated annual income not exceeding Rs. 1.8 million from levying withholding tax on interest and to introduce a self-declaration to make provision of a Tax Identification Number (TIN) mandatory for opening all types of bank accounts.