Government to introduce digital systems to strengthen public tax administration

• IRD to replicate success of foolproof sticker management system introduced by Excise Department

By Nishel Fernando
The government plans to introduce several digital systems and services to strengthen the public tax administration, with a view to replicate the success of the foolproof sticker management system introduced by the Excise Department.

“In order to strengthen public tax administration, we are specially focusing on introducing digital systems and services next year. We are planning to further build up on the existing digital systems and services that have been already in the public tax administration,” Fiscal Policy Department Director General Dr. Kapila Senanayake said.
Following the introduction of the foolproof sticker management system by the Excise Department in July this year, he pointed out that excise tax revenue has seen a marked increase from Rs.09-10 billion per month to Rs.17 billion per month at present.

“The digital system has enabled the Excise Department to collect the earlier unrealised tax potential. This again confirms the belief that digitalisation improves the efficiency in tax collections,” he added.
A recent International Monetary Fund study highlighted that digitalisation could help South Asian countries to improve their revenue efficiency by reducing the administrative burden on taxpayers.

Meanwhile, Senanayake shared plans to strengthen large taxpayer units at the Inland Revenue Department (IRD) and a single window system established at the Sri Lanka Customs next year.

Further, he noted that the government would move ahead with the budget proposal to open a tax file for everyone above 18 years of age.

“Everyone over 18 years of age will get a tax file number as in other countries. At the same time, the tax audits will also be strengthened,” he said.

Senanayake stressed that improvements in tax administration goes hand in hand with the tax reforms. Therefore, he outlined that both are critical to achieve a primary surplus target of 2.3 percent of GDP in 2025, from an estimated deficit of 4 percent this year.