Centralised data base to nab tax evaders

by Chandani Jayatilleke

The Inland Revenue Department (IRD) is setting up a centralised database of the business population to identify organisations and people who could be taxed.

A proper data base will be a useful tool to increase tax collection. The survey to gather database information was conducted during the ‘Tax Week’ from March 14 to 18, Commissioner General of Inland Revenue, Kalyani Dahanayake told Sunday Observer Business.

“We have no proper data relating to businesses except the data available at the Registrar of Companies, and the data of returns and information in our department internally.

We hope to develop a database with correct information through this survey. It is difficult to find accurate data about businesses and those who pay tax and those who do not,” she said.

The officers of the department were deployed to fulfil this task last week.

Although taxes are the key source of government revenue, Sri Lanka’s tax-to-gross domestic product (GDP) ratio is about 11 percent, which is not satisfactory with peer countries raising around 25% of the GDP through taxes.

Over the next few years the government hopes to increase the tax-to-GDP ratio to 15%.

The revenue collection targeted this year is Rs. 680 billion including Rs. 512.7 billion as domestic taxes and the balance through the Customs (VAT and NBT).

Commissioner Dahanayake is confident of achieving the tax collection target this year. “We have created a tax-payer friendly environment within the department and we encourage voluntary compliance while deterring tax evasion and tax avoidance.

“People should volunteer and pay their share of tax as the money is necessary to develop the country and provide infrastructure, health and education facilities free to the people.

We are a very fortunate people - which other country would provide such essential services at no cost?” she queried.

She said analytical studies should be done to find out why the tax-to-GDP ratio is going down. However, it is said that forty percent of the population live on subsidies provided by the government.

“That’s a major issue for the economy. We have to create conditions where people can live without subsidies, then tax revenue could be used for more development rather than being spent on subsidies.

On the other hand with such improved conditions, there will be more taxpayers to contribute to the economy,” she said.

Any information on taxes can be obtained by calling 1944