Mar 19, 2018 (LBO) – Sri Lanka’s Finance minister says the island must optimize utilizing local resources with a well-managed and efficient tax system as a pro-growth catalyst.
My contention is that the new Inland Revenue Act will bring a paradigm shift to taxation in this country that is in line with our policy of updating complex legislations to achieve our development goals in this 21st century, Mangala Samaraweera, Finance Minister said.
The minister was addressing a seminar organized by the Inland Revenue Department (IRD) to educate the public on the new Inland Revenue Act that will come into effect from April 01st 2018.
“Our current phase of international economic standing as a middle-income country does not allure significant amount of foreign aid and grants,” he said.
“In addition to that, in a precarious international investment and trade environment, developing countries like Sri Lanka must enhance the fiscal income with a view to offset the narrowing external drains.”
Sri Lanka is among the lowest tax revenue countries.
Data shows despite the continued rise in income levels, the tax revenue failed to record any improvements.
Some experts opined that on one hand the tax system was complex and confusing, on the other hand there were numerous ad-hoc tax concessions, over 200 of them, which were granted without any rationale.
“Our Government has shown steadfast commitment towards making an investor-friendly environment by carrying out necessary improvements in doing-business and providing infrastructure and other facilities.
“Every citizen who wishes to be an entrepreneur will have an environment of transparency, fairness and equity in future Sri Lanka once our new rules-based legal system in operation,” Samaraweera said.
The Inland Revenue Department (IRD) is at present taking measures to improve tax administration to increase tax compliance and collection from high income earners.
At present, only a small share of persons in each tax decile is actually paying taxes in Sri Lanka. According to the IRD, as of 2015, just 426,496 employees paid Pay As You Earn taxes and only 135,170 individuals paid Personal Income Tax.