Business Times

Tax Dept. falls short of targets

Pressure as IMF-backed restructuring process gets underway
By Bandula Sirimanna, Pic by J. Weerasekera

The Government, seriously considering a suggestion made by the International Monetary Fund (IMF), is going ahead with a massive re-organisation of the Inland Revenue Department (IRD) as revenue collection is falling far short of expected targets. Last year the revenue collection from the target fell by over Rs. 9 billion.


A policeman watches as dozens of officers of the Inland Revenue Department stage a lunch-time protest on Friday against a brutal attack on a senior colleague at the Matara branch.

Policymakers and tax authorities are at the drawing board preparing the new re-structuring plan, IRD officials said, adding that the Government plans to introduce an efficient tax management system and implement comprehensive tax reforms shortly.

The Presidential Tax Commission is scheduled to hand over its report to the Government this month in which a more simplified tax system is to be recommended with a lesser number of taxes.

Considering the details of the report the Government will formulate a simple tax procedure shortly, they said, adding that Finance Ministry officials are insisting that the IRD should increase the tax revenue collection which is around 40 % at present.

A senior official of the IRD said that the IMF and Finance Ministry officials want the Tax Department to expedite the revenue collection process or to restructure the institute to meet the targets. At a recent meeting with the IMF and Finance Ministry, the IRD officials explained their difficulties in collecting taxes under the present economic situation of the people.


Agitated investors outside the Matara branch of the Colombo Stock Exchange on Monday after a delay in the automated trading system.

IRD officials have brought to the notice of the government authorities on the need to strengthen tax filing systems, close tax loopholes and introduce a compliance based taxation system. These matters should be rectified rather than planning to restructure the institution, they argue.

Asked to comment on the re-structuring process, IMF Country representative Koshy Mathai, said: “We are looking forward to seeing what additional steps the government takes to reform the structure of taxes and the administration of those taxes.”

Tax officials said as a major step towards enhancing the Human Resources Development under the restructuring process of revenue collection, the government is to set up an academy to train public servants and strengthen the country's fiscal and revenue administration. It will absorb the services presently provided by other government agencies in such training.

The proposed academy will provide training facilities to officers in the Ministry of Finance and Planning, including those attached to accountancy service and planning service and officers of the Inland Revenue Department, Customs Department and Excise Department. This action has been taken considering the inadequacy of training facilities in public finance, accountancy and taxation which are acutely felt needs, Finance Ministry officials said.

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