Inland Revenue Dept cracks down on tax defaulters amidst treasury revenue shortfall
August 25, Colombo (LNW): The Inland Revenue Department (IRD) has initiated measures to freeze around 900 bank accounts linked to tax defaulters as part of an effort to recover outstanding taxes.
This action was revealed by the Parliamentary Committee on Ways and Means, chaired by MP Patali Champika Ranawaka.
The move follows substantial revenue losses totalling nearly Rs. 2 trillion, stemming from tax exemptions amounting to Rs. 978 billion and inefficiencies in collecting over Rs. 1 trillion from major revenue agencies.
Despite these challenges, the IRD, alongside Sri Lanka Customs and the Excise Department, has managed to gather Rs. 1,680.2 billion during the first half of the year—representing 44 per cent of the government’s revenue target.
However, the collection system still faces significant issues, including the issuance of Tax Identification Numbers (TINs). Although around 13 million individuals qualify as taxpayers, only 5 million have received TINs.
The authorities plan to issue TINs to the remaining eligible population by year-end, but the integration of these numbers with other government systems, like driving licences, remains a challenge.
Regarding Sri Lanka Customs, MP Ranawaka highlighted systemic invoicing problems, such as under-invoicing, over-invoicing, and ghost invoicing, which obstruct efficient tax collection.
Additionally, the continued use of a temporary import scheme for 65 per cent of goods, especially food items, has contributed to an annual loss of approximately US$ 4 billion—exceeding the country’s balance of payments deficit.
The Excise Department has reported Rs. 7.9 billion in uncollected taxes, primarily from ten distilleries.
Although repeated warnings have been issued to revoke their licenses and recover these dues, the department claims it lacks the authority to act without direct orders from the Ministry of Finance.
