COLOMBO: Sri Lanka’s new Inland Revenue Act taking will double the share of direct taxes of the total collection in two years, said Finance Minister Mangala Samaraweera.
“This new legislation carves a clear strategic direction about taxation in the country. We expect to increase the share of direct income tax against indirect taxes to 40:60 by 2020, from the current level of 18:82,” Samaraweera told a seminar on the new Inland Revenue Act which take effect from 01 April 2018.
That is one of the hallmarks of a fairer tax system. Yet, we are fully cognisant that this is an enormously challenging goal. The new Inland Revenue Act is a timely step in that direction. I hope we will have a smooth transition and a better system with the passage of time,” he said.
Sri Lanka aims to improve tax compliance by strengthening administrative powers of the Inland Revenue Department.
Tax compliance in Sri Lanka is one of the weakest in the region.
Since independence, Sri Lanka’s income tax share of total tax revenue has remained flat and hardly crossed a threshold of 20 percent. Tax revenue to GDP declined over two decades to just over 10% in 2014.
