The Income Tax Department and The General Sales tax Department were merged in one Department on 16/8/2004 under the name Income and Sales Tax Department  by the amended law of each of the Income Tax Law and the Sales Tax Law, published in Official Gazette No. 4672 Date 16/8/2004.

Historically, The Income Tax Department was established in 1951. It has exercised its work under the Law No. (50) for the year 1950 and since then tax legislation came through several amendments for the purposes of developing legislations, keeping abreast of economic and social changes and fill the gaps arising as a result of application. The latest amendments were in the year 2003 under the Amendment Law (No. 39) for the year 2003 amending the Income Tax Law No. 57 of 1985.

The sales tax has begun as excise tax in 1926 and concluded to the current format of the sales tax which came into force on 1/1/2001 under the law No. (36) for the year 2000. It is tantamount to a system of value added tax applied internationally, as the legislation passed in many stages of development before reaching the current format,The department works with two separate laws; one for income tax and the other for sales tax.