• Treasury seeks judicial reforms aiming to speed up tax recovery
• IRD over-achieves tax collection target for second consecutive quarter

Sri Lanka’s Inland Revenue Department (IRD) has collected 55% of collectable defaulted taxes by the end of June (1H), while the Treasury is making judicial reforms to expedite the collection of defaulted taxes within the appeal process, the Ministry of Finance said.

According to a statement by the Treasury, out of the outstanding defaulted taxes of Rs. 1,066 billion owed to IRD as of the end of 2023, Rs. 878 billion are in various stages of the appeals process.

It added that out of the balance taxes in arrears outside of the appeals process, which was at Rs. 188 billion as at the end of 2023, the IRD was able to collect Rs. 104 billion within the first six months of 2024.

The statement said that Sri Lanka being a democratic system, has a system of checks and balances where the government authority cannot unilaterally force the citizen to pay whatever tax is assessed.

The Treasury said that if the citizen has a legitimate grievance regarding the assessment that is made, he or she has the right to appeal through the judicial process.

“It is true that it is necessary to make the appeals process more efficient, and this is happening through a broader process of judicial reforms,” the statement said.

However, it said that nobody would expect the state to be able to unilaterally appropriate all taxes that are in the appeals process and completely go against due process.

The IRD announced that it over-achieved the tax collection target for the second consecutive quarter as it collected Rs. 902 billion in the first half of 2024 while its target was Rs. 826 billion.