Sri Lanka’s Inland Revenue Department (IRD) has collected around 61% of its ambitious Rs. 2,402 billion tax revenue target for 2026, putting the Government on course to meet its full-year goal despite the continuing challenge of broadening the country’s taxpayer base.
IRD Commissioner of Tax Policy and Law Nandana Kumar said tax revenue collection had increased by around 16% compared with the previous year. Speaking on Ada Derana’s BIG FOCUS programme, he expressed confidence that the department would achieve the revenue target before the end of 2026.
The figures indicate a significant improvement in revenue mobilisation, but the more important question is whether the increase represents a sustainable expansion of the tax base or a short-term improvement in collection from existing taxpayers.
Kumar said the department had introduced several measures to bring more individuals and businesses into the tax system. Those efforts have resulted in approximately 1.2 million individual income tax files being opened.
However, the figure includes both people who voluntarily registered and those who were brought into the system through mandatory registration. The distinction is important because registration does not necessarily mean that every taxpayer is generating substantial additional revenue.
The commissioner said the department had adopted different approaches to increase registration, including encouraging taxpayers to register voluntarily where their income exceeded the relevant threshold.
More than 130,000 companies have also registered for tax purposes, according to the IRD.
The expansion of registrations is potentially significant for Sri Lanka’s revenue position. A broader taxpayer base can reduce dependence on a relatively narrow group of taxpayers while improving the Government’s capacity to collect revenue from economic activity across different sectors.
However the number of registered taxpayers alone does not establish how much additional revenue is being generated. The crucial measure will be how many of the newly registered individuals and companies ultimately become consistent tax contributors and how effectively the IRD can monitor compliance.
Kumar’s assessment is nevertheless optimistic. With 61% of the annual target already collected and revenue running about 16% above the corresponding level of the previous year, the department believes the remaining target is achievable.
The Government’s revenue strategy is therefore entering a decisive phase. Maintaining the pace of collection will be essential if the 2026 target is to be met without placing disproportionate pressure on existing taxpayers.
At the same time, expanding registration must be matched by stronger compliance, accurate taxpayer assessments and effective enforcement.
Sri Lanka’s tax challenge is no longer simply about collecting more. It is increasingly about ensuring that a larger share of economic activity enters the formal tax system, creating a wider and more sustainable foundation for public revenue.
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