COLOMBO: Sri Lankan government tax collections remain insufficient with only a relatively few companies and individuals are paying tax payments,Finance Minister Ravi Karunanayake said.
“For a country of 23 million people, there are only 48,000 corporate tax files,” he told the annual general meeting of the Exporters’ Association of Sri Lanka.
“There are only 148,000 individual tax files, only 21,000 NBT (Nation Building Tax) tax files and only 15,000 VAT (value added tax) files.“Aren’t we a shameful nation,not to be paying taxes?” Karunanayake asked.Other analysts have pointed out that the largest tax most people even less affluent people – pay in Sri Lanka is the up-front tax for a vehicle, which were close 20 percent of total tax revenues last year.
To give ‘incentives’ and intervene in investment to ‘thrust sectors’ and other areas, long tax holidays are given. Listed bonds bought by high networth individuals and institutions are also exempt from tax while bank deposits are taxed. The government has said it will seek to raise the tax-to-GDP ratio to near 15 percent by 2020 by implementation of a new Inland Revenue Act, reform of the VAT and the customs code.
Karunanayake said 80 percent of the people don’t know they are taxed almost 60 percent of their earnings, much of it through indirect taxes.“It is the upper end (of society) that is not responding to our call (to increase tax payments),” he said. “We need to ensure a fairer contribution.”
