Shortcomings in Inland Revenue Act hampers collection of over Rs.900 billion

By Kelum Bandara  

Shortcomings in the Inland Revenue Act have hampered the collection of a whopping over Rs.900 billion in tax revenue to the state coffers, an MP said.  

Kandy district MP Mahindananda Aluthgamage, who chairs the Parliamentary Sectorial Oversight Committee on National Economic and Physical Plans, said the Inland Revenue Department had been unable to collect this colossal sum due to prolonged tax appeal processes, delays in the appointment of appeal boards, and litigation issues.  

Kandy district MP Mahindananda Aluthgamage, who chairs the Parliamentary Sectorial Oversight Committee on National Economic and Physical Plans, said the Inland Revenue Department had been unable to collect this colossal sum due to prolonged tax appeal processes, delays in the appointment of appeal boards, and litigation issues. 

Speaking to the Daily Mirror, Aluthgamage emphasized that the lengthy duration of tax appeals and litigation process that can take up to 15 years has been a major hindrance to revenue collection. He said his committee would propose amendments to the law, suggesting the reduction of time limits for tax appeals and the streamlining of appeal board procedures.  
Aluthgamage has already engaged with the justice minister to discuss these proposed changes.  

The government is currently facing a significant challenge in meeting its revenue targets, particularly in line with the programme set by the International Monetary Fund (IMF). Mr. Aluthgamage said he identified the lack of coordination between the Inland Revenue Department and Sri Lanka Customs as another obstacle to effective tax collection.  
Commenting on the activities of Sri Lanka Customs, Aluthgamage expressed concern over the lower-than-expected revenue collection.  

“Out of the 105,000 limited liability companies, only 387 of them are paying taxes. There are 500,000 tax files opened, but revenue is collected from 31,000.