Public Finance Data and Analysis
Free and Open Access to
The Committee on Ways and Means disclosed that by the end of 2023, default taxes owed to the Sri Lankan Government had surpassed Rs. 1 trillion, with the Inland Revenue Department (IRD) accounting for a significant portion. Out of this, the IRD alone had default taxes amounting to Rs. 1,066 billion, with approximately 4,479 taxpayers responsible. The cumbersome and protracted legal process involved in tax collection, coupled with disputes over assessments and manual audit procedures, has contributed to the escalating default taxes. Furthermore, the IRD's struggle to meet its target of opening tax files due to administrative complexities poses a substantial challenge, hindering effective revenue collection.
Despite the government's efforts, default taxes owed to the Inland Revenue Department (IRD) and other revenue-generating institutions in Sri Lanka have exceeded Rs. 1 trillion by the close of 2023. With the IRD alone facing default taxes of Rs. 1,066 billion, the challenge of tax evasion persists, exacerbated by lengthy legal battles and disputed assessments. Additionally, administrative hurdles hamper the IRD's ability to open tax files efficiently, impeding revenue collection efforts. The Committee's report highlights the need for streamlined processes and enhanced transparency to address tax evasion effectively and improve revenue collection for the government.
