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IRD targets Rs. 900 b tax revenue in 2021

01 Jan 2022

By Yakuta Dawood The Inland Revenue Department (IRD) aims to achieve Rs. 907 billion in tax revenue this year, the highest target set in the past five years, The Sunday Morning Business learns.  Speaking to us, IRD Commissioner General H.M.W.C. Bandara highlighted that this target is achievable amidst the present challenges, as an additional revenue of Rs. 254 billion is expected to be generated in 2022 due to the three new tax policies introduced in 2021. “The Social Security Contribution will generate Rs. 140 billion, a one-time tax surcharge of 25% will have an income of Rs. 100 billion, and the Value Added Tax (VAT) on finance will generate Rs. 14 billion. Overall, Rs. 254 billion will be added to our usual collection,” Bandara explained. When inquired about the revenue performance for the year 2021, he responded positively by stating that the country was able to successfully achieve 85% of its Rs. 575.5 billion revenue target for 2021, which is a 17% growth rate in comparison to 2020. He emphasised that the IRD could definitely achieve the revenue target of Rs. 907 billion if there is no major hindrance caused by the prevailing Covid-19 pandemic. In the Budget 2022 reading last year, Finance Minister Basil Rajapaksa announced that the Social Security Contribution is proposed to rebuild Sri Lanka’s economy. “This contribution will be charged at 2.5% on the annual threshold turnover exceeding Rs. 120 million,” he said. At the same gathering, Rajapaksa also stated that the tax surcharge of 25% will be imposed on persons or companies with taxable income over Rs. 2,000 million for the year of assessment 2020/2021. In May 2021, the IRD achieved 98% of its target for the first six months by collecting Rs. 226,854 million. Accordingly, the Committee on Public Finance (COPF), chaired by Anura Priyadarshana Yapa, had appreciated the IRD’s achievement in the face of the present global crisis, stressing that the IRD should increase the number of taxpayers in Sri Lanka. The revenue target given by the Government to the IRD in 2020 was Rs. 613 billion. This was close to 2016’s total revenue collection, which was about Rs. 641 billion. This reduction in the target was done due to the various tax relief measures provided by the Government in their initial months to stimulate consumer spending and economic growth in the country. However, Bandara told The Sunday Morning Business that out of this figure, only Rs. 495 billion was supposed to be raised by the IRD in 2020, and even out of that amount, only 86% of the target was met by the end of the year. Commenting on this, then IRD Commissioner General Nadun Guruge, in November 2020, stated that while the target set for the year was Rs. 613 billion, by 30 September, only about Rs. 327 billion was raised compared to the Rs. 597 billion raised in the first three quarters of 2019. Furthermore, the IRD recorded a revenue of Rs. 836 billion in 2017, while in 2018 it managed to collect over Rs. 900 billion. According to several reports, the targets given for the years 2017 and 2018 were Rs. 651 billion and Rs. 792 billion, respectively. In 2019, the revenue target given to the IRD was Rs. 799 billion. The IRD had managed to get much closer to the target by achieving Rs. 785 billion in 2020, but it fell short of Rs. 14 billion.

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