Govt plans Revenue Authority to monitor underperforming IRD, Excise dept, Customs

ECONOMYNEXT – Sri Lanka is in the process of creating a Revenue Authority and the 2024 budget is likely to announce it to monitor the three key state income collecting bodies due to their poor performance, sources who are aware of the new move said.

A Parliament Sectoral Oversight Committee on National Economic and Physical Plans has said the government’s tax collection is far behind the target due to the lethargic attitude of the three main state revenue collecting institutions: Inland Revenue Department (IRD), Excise Department, and the Customs.

The government has estimated a revenue target of 3.1 trillion rupees for this year, but as of September 26, the collection has been only 1.64 trillion rupees.

Officials say the government is likely to face a 637-billion-rupee or 20.5 percent shortfall in revenue if the current collection trend continues.

The International Monetary Fund (IMF) has estimated a 15 percent shortfall in revenue but has asked the government to expand the tax net.

“The next budget will announce the Revenue Authority which will monitor all three revenue collecting institutions,” a source who is aware of the budget told EconomyNext on condition of anonymity.

“The major issue is inefficiency and corruption in all three revenue collectors. The new Authority will try to accelerate tax collection through finding solutions for the current delays.”

The official data showed that only 161 Company Income Tax (CIT) files, 8,533 Individual Income Tax (IIT) files, 14 Partnership files, 104 Value Added Tax (VAT) files, and 2,094 Social Security Contribution Levy (SSCL) files have been opened in the first eight months of this year.

The Parliament Sectoral Oversight Committee led by Mahindananda Aluthgamage MP recommended establishing a body to monitor and regulate all three state revenue collecting institutions.

Government officials have said an internal resistance to implement the Revenue Administration Management Information System (RAMIS) acquired from Singapore has resulted in the government losing billions of tax collections.

“Unfortunately, we need to create such a monitoring authority because the government is not reaching its targets and we need to find the reasons. We know some tax officials don’t like this because they might lose their side businesses. But this time, we have no choice,” another government official said.