Sri Lanka’s three revenue collection authorities, the Inland Revenue Department (IRD), Customs Department (CD) and the Excise Department (ED) are facing a daunting task of collecting additional tax revenue of over Rs. 800 billion via the new tax revisions introduced in Budget 2023, several high ranking officials of the three departments said.
Officers of these three departments specially the IRD have been called upon to collect additional taxes in an economic crisis amidst weak administration, ever increasing tax evasion, lack of motivation of taxpayers due to non-transparency in spending tax rupees with no social benefits and the shadow economy, they pointed out.
The IRD has to double its efforts in collecting this year’s target of Rs. 1667 billion as it’s more than twice the last year’s collection amount of Rs. 860 billion, a senior tax official disclosed.
Accordingly, compared to last year, it is expected to receive more tax money amounting to Rs.807 billion this year, he said.
The new corporate tax is expected to generate the highest revenue of Rs. 603 billion and an income Rs. 553 billion is expected from the 15 per cent Value Added Tax (VAT) in 2023. The Finance Ministry had to face unforeseen problems before the proper levying of Pay-As-You-Earn tax (PAYE).
A circular has been issued this week amending the amount of non-cash benefits provided to employees – including vehicle, fuel allowances, housing, communication and other benefits – considered when levying PAYE tax.
State Finance Minister Ranjith Siyambalapitiya told the Business Times that the payment of PAYE tax by government or semi-government institutions for the employees will be suspended. The Minister said the related circular will be issued soon.
The government is considering the appointment of an independent tax commission to inquire into the allegations of misusing tax money, spending it without transparency and monitor the tax collection in a justifiable manner with equality for all taxpayers and in accordance with the law.
The IRD has lost a sum of Rs. 201 billion up to November 2022 as a result of tax evasion more than double the estimated PAYE tax collection.
The Ministry is to take necessary measures to tackle the shadow economy such as earnings from private tuition, private practice of doctors and other avenues of hidden income earnings such as brokering, middlemen in supply chain etc.
The ED will be made more efficient in the implementation of Excise Ordinance and Tobacco Act to achieve the department history’s highest tax revenue target of Rs.217 billion for 2023
The CD will also be transformed into a more efficient, honest, and, transparent institution without corruption to enable it to meet the target of at least Rs. 750 billion this year.
Source: Sunday Times
