‘Taxpayers are Honourable’ slogan by IRD to shore up respect, revenue

By Uditha Jayasinghe

For those who pay taxes and want to, finally there appears to be respect or at least a new slogan that will convey the same as the Government plans to shore up revenue by improving compliance in a relatively low rate regime.

The Inland Revenue Department (IRD) yesterday unveiled a nation-wide public awareness campaign titled ‘Taxpayers are Honourable’ as the forerunner to the country’s first-ever Tax Week starting from 1 November.

“We are aware that the IRD must also become more efficient to win the trust of the people. We know that many people are wary of paying their taxes and fear the IRD. But we have been working during the past two months to dispel this impression and have even held internal workshops to help staff change their attitude in dealing with the public,” Commissioner General of Inland Revenue Mallika Samarasekara told journalists yesterday.

At present there are about 897,000 taxpayers in Sri Lanka inclusive of the PAYE category. The IRD hopes to attract another 50,000 into the tax net, but has not set a timeline for the target. Understandably, the largest number of files is from the income tax category and in 2011 there were 756,757 of them under the IRD.



According to the latest records, there are 32,335 local registered companies paying tax, while 412 foreign companies are also contributors. By comparison only 54 State companies and 1,275 cooperative societies pay their taxes, while 1,679 partnership businesses are also registered taxpayers.

Samarasekara said the target for IRD for 2012 was Rs. 336 billion, and by last week Rs. 288 billion had been collected. Inclusive of those collected by Customs on its behalf, the overall IRD component is Rs. 512 billion, out of the Rs. 1 trillion of tax revenue approved in the 2012 Budget. Currently total tax revenue is 14.4% of GDP, with the IRD share dropping to around 7-8%. In 2011, overall collection of IRD was Rs. 442 billion, whilst in the previous year it was Rs. 328 billion.

The Commissioner General said the previous two Budgets had simplified and reduced taxation with the objective of giving relief to the people as well as encouraging them to invest in addition to improving compliance. She described the personal income tax rate at 24% and corporate tax rate of 28% as being among the lowest in the world.

She pointed out that for an effective tax collection system, Sri Lanka needs an integrated computerised system that tracks the financial actions of all citizens. However, without such a platform, she emphasised that the onus remained on the masses to be conscientious in their tax payments. In 2011 a total of 1,736 cases against tax evaders have been filed in court

As part of the Tax Week, seminars will be conducted in all districts while leaflets on the function of the IRD will be distributed in all main cities. A ‘one-stop-shop’ for all tax purposes will also be opened at the IRD as part of the promotion. She also remarked that there would be a special committee appointed after the Budget presentation to deal with any complaints or suggestions posted by taxpayers.

In the first seven months of this year, Government revenue amounted to Rs. 556 billion, up by 12.5% over the corresponding period of last year. The share of tax revenue was Rs. 490.4 billion, up by 12% from a year earlier, whilst non-tax amounted to Rs. 65.7 billion, up by 83%. Last year tax revenue rose by 12% to Rs. 812.6 billion from 2010 and non-tax revenue by 32% to Rs. 122.1 billion, bringing the total revenue to Rs. 934.8 billion, up by 14.4% from 2010.