By: Staff Writer
July 07, Colombo (LNW):The Inland Revenue Department’s (IRD) record-breaking tax collections have become one of the National People’s Power (NPP) Government’s biggest fiscal achievements. Yet behind the impressive revenue figures, leading tax professionals are questioning whether Sri Lanka’s tax administration is becoming increasingly driven by revenue targets at the expense of transparency, taxpayer rights and investor confidence.
Those concerns were voiced forcefully at the CA Sri Lanka 5th Annual Economic and Tax Symposium, where senior tax practitioners warned that the country’s tax authority appears to be moving beyond its traditional role of administering tax laws into interpreting and, in some instances, influencing tax policy.
Fresh from surpassing tax collection targets in 2025 and expected to exceed revenue goals again this year, the IRD has been empowered under a series of new tax measures introduced as part of Sri Lanka’s fiscal consolidation programme. While the Government has defended stronger enforcement as essential to restoring public finances, experts argued that administrative practices are becoming increasingly aggressive and unpredictable.
John Keells Group Head of Corporate Structuring, Strategic Tax and Social Entrepreneurship Nisreen Rehmanjee cautioned that delegating policy interpretation to tax administrators blurs the constitutional distinction between Parliament, which enacts tax laws, and the IRD, which administers them.
She warned that opaque legal interpretations and the absence of published private rulings create uncertainty for taxpayers, while different interpretations can be applied to similar cases. According to Rehmanjee, some assessments have even undergone significant legal changes during administrative reviews, raising concerns over procedural fairness.
She urged CA Sri Lanka to speak out more strongly on taxpayer rights, arguing that efficient tax collection should never come at the expense of accountability and transparency.
Senior tax consultant N.R. Gajendran argued that Sri Lanka’s problem is not necessarily weak tax laws but weak administration. He questioned whether record revenue collections reflected genuine tax reform or simply heavier taxation of existing compliant taxpayers without sufficiently expanding the tax base.
He warned that excessive tax burdens reduce household spending, business investment and savings, ultimately slowing economic growth. Gajendran also criticised delays in processing refunds and what he described as a risk-averse culture within the Department that prolongs disputes and drives unnecessary litigation.
Ranaweera Associates Managing Partner Athula Ranaweera highlighted inconsistent technical interpretations among IRD officials, saying taxpayers often receive different answers to identical questions depending on the officer handling the matter. He called for greater investment in technical training and taxpayer education.
Meanwhile, Helakuru Founder Dhanika Perera advocated a technology-driven transformation of tax administration through integrated digital platforms, open APIs and artificial intelligence to simplify compliance rather than merely digitising bureaucracy.
The symposium’s message was clear: stronger revenue collection is necessary for fiscal stability, but sustainable compliance depends equally on certainty, consistency and trust. As Sri Lanka pursues ambitious revenue targets, the challenge for policymakers will be ensuring that administrative powers remain balanced by transparency, fairness and respect for taxpayer rights.
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