• SL fails to achieve fund’s revenue goal
• Discussions on with IRD, Excise Dept.

The Ministry of Finance has commenced discussions with tax collecting agencies on possible strategies to improve the Government’s tax revenue following Sri Lanka’s failure to achieve the tax revenue target of Rs. 1.3 trillion set out for the first half of 2023 by the International Monetary Fund (IMF) under the Extended Fund Facility (EFF).

Speaking to The Sunday Morning Business, Ministry of Finance Deputy Secretary R.M.P. Rathnayake, while conceding that Sri Lanka had failed to achieve the tax revenue target set by the IMF, stated that discussions had commenced with the Inland Revenue Department (IRD) and the Excise Department on feasible strategies to improve the Government’s tax revenue generation.

He stated: “The tax collecting authorities have come up with several proposals to improve our tax administration and tax collection, through which we will find a solution. This involves improvements in tax collection methods and some other administrative measures. We are continuously working with the IRD and the Excise Department for this purpose.”

Responding to a query on whether Sri Lanka would achieve the year-end tax revenue target, Rathnayake revealed that the Government would have to discuss with the IMF regarding the numbers of the tax revenue targets and come to an agreement.

The IMF Staff Report on Sri Lanka has set out a proposed indicative target for the Central Government tax revenue of Rs. 1,300 billion for the first six months of 2023 and Rs. 2,940 billion by the end of 2023.

However, according to the latest weekly report published by the Central Bank of Sri Lanka (CBSL), Sri Lanka has recorded a total revenue of Rs. 1,317.05 billion for the first six months of 2023, recording a 43% increase Year-on-Year, out of which Rs. 1,198.85 billion is attributed to tax revenue.

A statement released by the IRD showed that it had collected Rs. 697 billion for the first half of 2023, which is a 93% increase compared to the corresponding period in 2022.

It was also revealed in May in Parliament that Sri Lanka Customs would be unable to meet its annual revenue target of Rs. 1,226 billion due to the import restrictions on vehicles, which is 20% of the total revenue component, only being capable of achieving a revenue of Rs. 783 billion by the end of the year.

As of May, Sri Lanka Customs had collected Rs. 330 billion out of the first five months’ target of Rs. 510 billion.