• IRD reports accumulation of unpaid taxes and penalties, with VAT accounting for Rs. 59 b
• Disputed taxes under legal appeal stand at Rs. 974.3 b, highlighting ongoing challenges

Sri Lanka’s collectible tax defaults and its penalties amounted to Rs. 175.6 billion by the end of 2024, with value added tax (VAT) defaults totalling Rs. 59 billion, the Inland Revenue Department (IRD) said.

In the annual report for 2024, IRD said that the total collectable taxes and penalties for 2024 amounted to Rs. 175.6 billion, with penalties amounting to Rs. 79.2 billion.

Collectable taxes are those assessments that have either not been appealed by the taxpayers or have been appealed and resolved, with decisions on the appeals having been rendered.

“These collectable taxes represent confirmed liabilities that the IRD expects to collect,” IRD said.

IRD also said that the challenging circumstances that have persisted in the country since 2019 have contributed to the accumulation of these figures to such a significant level, and that the IRD is intensifying its efforts to recover overdue.

Among the collectable taxes, the defaulted VAT taxes and their penalties amounted to Rs. 113.8 billion by the end of 2024, while the defaulted income taxes amounted to Rs. 34.9 billion and their penalties to Rs. 22.8 billion.

About Rs. 2 billion in defaulted taxes and penalties were collectable through the PAYE tax by the end of 2024.

Meanwhile, disputed taxes, taxes currently under legal dispute, amounted to Rs. 974.3 billion along with their penalties by the end of 2024.

However, the highest value of defaulted taxes among the disputed tax values was income tax was Rs. 347.1 billion was disputed and Rs. 199.5 billion has been accumulated as penalties on those taxes.