Government income has exceeded the expected goal of around Rs. 2,850 million this year due to numerous productive measures taken in the past few months.
“Government revenue is reaching nearly three trillion rupees,” said Director General of the State Revenue Unit of the President’s Office, (SRU PO) M. J. Gunasiri Comparing global standards, Gunasiri said that in many countries, VAT revenue constitutes between 6-8% of the Gross Domestic Product (GDP).
“However, in Sri Lanka, the VAT revenue for the current year is at 2.2% of GDP. The expectation is to increase VAT revenue to around 4% of GDP in 2024.”
While acknowledging that this is not an optimal level, Gunasiri stressed the importance of implementing mechanisms for sustained economic activities. “To achieve this, the 2024 budget has proposed a comprehensive program for the digitisation and integration of all institutions.”
Gunasiri said that if people or businesses unreasonably increase the prices of goods, the Government and the public have the means to take measures in response.
Commissioner of the Department of Inland Revenue, A. M. Nafeer, said that there is a notable increase in the number of registered taxpayers.
“In 2022, 73,444 companies were registered, a number that grew to 81,909 by the end of November 2023.”
For individuals, the count rose from 204,467 in 2022 to 500,196 by the end of November this year. Joint ventures recorded an increase from 13,776 to 15,579. Income tax registrations surged from 41,636 to 242,679, while VAT registrations rose from 10,604 to 13,546.
Highlighting the financial impact, Nafeer said that the income of the Inland Revenue Department, which was Rs. 1,025 billion in 2019, decreased to Rs. 500 billion in 2020. However, this year witnessed a significant increase to Rs. 1,500 billion, achieved through broadening the tax base and modifying tax rates.
To enhance tax compliance, Nafeer said that starting from January 2024, all those above the age of 18 must obtain a Tax Identification Number (TIN) from the IRD.
He said that obtaining the registration number and opening tax files are two distinct processes. While everyone has a national identity card number, the Inland Revenue Department’s registration number (TIN Number) is also mandatory. It is essential to open a file for income tax payment only if individuals have sufficient income to be liable for taxation.
The Director of the State Revenue Unit of the President’s Office K.K.I Eranda, outlined the significance of the VAT as a primary revenue generation tool for the country. “The initial expectation for VAT revenue in 2023 was over Rs. 600 billion, but only around Rs. 450 billion has been collected.”
