Over 95-pct of Sri Lankan tax file holders hide true income

Oct 25, 2017 (LBO) – Sri Lankan tax file holders are hiding their true income albeit the direct taxes in the country are lower than many Asian countries, a legislator said. Member of the Committee on Public Finance, Parliamentarian Ashu Marasinghe said Sri Lanka’s tax revenue is currently comprised of about 13.1 percent direct taxes. Marasinghe said even countries like Nepal is collecting over 19 percent of their revenue through direct taxes.

(Maldives 32, Malaysia 25, Thailand 24, China 22, Myanmar 22, India 20) “There are about 120,000 income tax files in the country but below 40,000 file holders pay at least one rupee as tax,” he said. “Less than 5 percent of tax file holders reveal their true income and less than 10 percent of tax file holders reveal their true business turnover.

” Marasinghe said around 98 percent of the businesses are not revealing their true stock position to pay a lower tax through various adjustments. According to him, 768 companies pay 94 percent of Sri Lanka’s total income tax. He said Inland Revenue Department by September 2017 has collected 139 billion rupees as direct taxes although the annual estimate is 190 billion rupees. In 2015, Sri Lanka collected 262 billion rupees as direct taxes but it reduced to 258 billion rupees last year. Sri Lanka’s newly revised Inland Revenue Act aims to widen tax net and in the next 2-3 years increase the direct tax component and reduce the indirect taxpayers.