[World Tax News] Sri Lanka Partners with Global Forum to Combat Tax Evasion

Editorial Team – [2025] 178 taxmann.com 480 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week:

1. Sri Lanka joins the Global Forum to strengthen efforts against tax evasion

Sri Lanka has joined the international efforts against tax evasion and illicit financial flows by becoming the 173rd member and the 23rd Asian member of the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum).

Like all other members, Sri Lanka will participate in the Global Forum on equal terms and has committed to addressing offshore tax evasion through the implementation of internationally agreed standards on transparency and the exchange of information on request (EOIR) as well as automatic exchange of information (AEOI).

The Global Forum includes all G20 nations, all OECD countries, major international financial centres, and most developing countries.

“We are pleased to welcome Sri Lanka as a member,” stated Gaël Perraud, Chair of the Global Forum. “Sri Lanka’s accession reflects the growing determination of jurisdictions worldwide to work together in combating tax evasion and avoidance. This step makes a significant contribution to strengthening our global community and advancing international co-operation in tax matters.”

As a new member, Sri Lanka will benefit from the induction programme, which is a comprehensive multi-year capacity-building initiative designed to support new members in adopting and applying these standards.

The Global Forum is the principal multilateral body mandated to ensure that jurisdictions worldwide comply with and effectively implement both the exchange of information on request standard and the automatic exchange of information standards. These objectives are pursued through a rigorous system of monitoring and peer review. The Global Forum also runs an extensive capacity-building programme to assist members in implementing the standards and to help tax administrations make the best possible use of cross-border information-sharing channels.

Source – OECD

2. Canada Announces Changes to the Voluntary Disclosures Program Effective October 2025

The Canada Revenue Agency (CRA) has released details of upcoming changes to the Voluntary Disclosures Program (VDP), which will take effect on October 1, 2025. The VDP applies broadly to disclosures involving income tax, GST/HST, withholding taxes, excise duties and taxes, the federal fuel charge, luxury tax, underused housing tax, digital services tax, global minimum tax, air travellers security charge, and the softwood lumber export charge.

Key Updates

• New Policy Documents

(a) Information Circular IC00-1R7, Voluntary Disclosures Program
(b)  GST/HST Memorandum 16-5-1, Voluntary Disclosures Program (Applications Received On or After October 1, 2025)

Applications received before October 1, 2025 will continue to be reviewed under the current policies (IC00-1R6 and GST/HST Memorandum 16-5).

•  Simplified Application Form

The CRA will release an updated version of Form RC199, Voluntary Disclosures Program (VDP) Application, on October 1, 2025. The new form is designed to be more streamlined and user-friendly.

•  Expanded Eligibility

(a) The VDP will now be less restrictive, allowing taxpayers and registrants prompted by CRA communications (e.g., education letters about unreported income or ineligible expenses) to qualify.
(b) However, eligibility will remain restricted for those under audit or investigation, or where there has been egregious non-compliance.

•  Updated Relief Structure

The revised program introduces two tiers of relief:

(a) General Relief: For unprompted applications → 75% interest relief + 100% penalty relief.
(b) Partial Relief: For prompted applications → 25% interest relief + up to 100% penalty relief.

• Documentation Requirements

Applicants must submit all supporting documents (returns, forms, statements, schedules) to correct non-compliance. For multi-year cases, the required documentation period is:

(a) Foreign-sourced income/assets: Most recent 10 years
(b) Canadian-sourced income/assets: Most recent 6 years
(c) GST/HST: Most recent 4 years

If no errors exist in certain periods within these timeframes, documents for those periods are not required. The CRA may request additional documentation beyond these limits if necessary.

Source – Changes to the Voluntary Disclosures Program

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