Sri Lanka’s revenue mobilisation has been reinforced this year enabling the Inland Revenue Department (IRD) to achieve the target of Rs.800 billion, official sources said adding that the department has already collected Rs. 750 billion upto November.
The revenue mobilisation efforts have gained strength from the measures adopted by the Finance Ministry.
These measures include the implementation of the new income tax legislation effective from April 1, 2018 and rationalising tax exemptions, raising the Value Added Tax (VAT) effective from mid 2016 and broadening the VAT base, and improvements in tax administration.
This was revealed in the 2019 Fiscal management report of the Finance Ministry adding that direct taxation system is expected to witness a significant development in the time ahead as the benefits of the new tax legislation comes in, in the year 2019 and beyond.
The direct taxation system broadened the tax base by eliminating a vast rate of tax holidays, partial tax holidays, and other concessions, while introducing a simplified three tier corporate tax structure, taxation of capital gains, and expanding the coverage of withholding taxes, among others, the report highlighted.
More focus has been placed on strengthening the tax return compliance, supported by measures such as conducting audits of employers’ obligation to income taxes for employees and services fees paid to professionals.
Further, the establishment of a Risk Management Unit and Dedicated Audit Unit at IRD has helped to analyse data and identify priority compliance risks and conduct high risk compliance audits, respectively, it said.
The IRD has collected Rs.652 billion from taxes, including VAT, Nation Building Tax (NBT) and Pay as You Earn (PAYE) in 2018.
(LI)