Sri Lanka to start mobile tax file registration amid tough IMF revenue target

ECONOMYNEXT – Sri Lanka’s Inland Revenue Department (IRD) will start mobile service to reach people to open tax files, State Finance Minister Shehan Semasinghe said, as the island nation is in the process of boosting the number of personal income tax payers amid a challenging 2024 revenue target committed with the International Monetary Fund (IMF).

President Ranil Wickremesinghe, who is also the island nation’s finance minister, has aimed to boost tax revenue by 47 percent in 2024 to 3.82 trillion rupees.

The IMF has urged the government to boost the revenue to sustain its debts after the country plunged into an unprecedented economic crisis and declared bankruptcy with sovereign debt default in April last year,

Wickremesinghe’s government targeted an increase of 1 million new tax files this year after it urged all above 18-years to open a tax file.

However, only a few thousands opened tax files this year.

“We will start the mobile services soon,” State Finance Minister Semasinghe told EconomyNext.

“When we also file our returns and when there is no document to be filled from one of the centers, it is not user friendly at all,” he said.
Many taxpayers have said they need to go from pillar to post when they visit to open a tax file. Though the IRD has an online registration method to open tax files, it is not user friendly, they say.

Semasinghe said the government wanted to start this immediately, but some people were concerned about starting this during the festive season and were advised not to start now.

Sri Lanka is now collecting income tax from everyone who earns more than 10 dollars a day, after the revenue based fiscal consolidation and potential output targeting debacles drove the country to external sovereign default, in the wake of serial currency crises and stabilization programs which reduced growth and pushed up debt.

According to data submitted by the IRD to the parliament, only 31,000 Sri Lankans out of some 500,000 persons registered for income tax pay personal income tax while 328 registered limited companies out of 105,000 contribute to 82 percent of tax revenue.

The IRD has proposed to impose a fine of 50,000 rupees and 5 percent of the tax payable on those who maintain tax files without submitting the report by the relevant date.

Admitting the failure to boost tax revenue in the recent time, President Wickremesinghe last month proposed to establish a revenue authority to boost tax collection.

The government also has raised indirect taxes including Value Added Tax (VAT) instead of direct taxes to boost the revenue and reach the IMF targets. (COLOMBO/Dec 18/2023)