📈 IMF Focus Shifts to Sri Lanka's Tax Administration Reforms

Sri Lanka's focus is moving from enacting tough tax legislation to modernising its tax administration, following substantial legal overhauls implemented over the past 18 months by the National People’s Power (NPP) Government. • Overall Figures & Progress: Revenue performance has consistently exceeded IMF program expectations, helping restore fiscal stability and secure sizeable primary surpluses. However, an investment of around Rs. 10 Bn in the Inland Revenue Department’s (IRD) Revenue Administration Management Information System (RAMIS) still leaves gaps in IT governance, risk management, data analytics, and taxpayer services. • New Legislative Measures: Recent far-reaching laws include criminal sanctions for failing to obtain Taxpayer Identification Numbers (TINs) or file returns, expanding investigative powers, and making cash payments over Rs. 500,000 non-deductible for income tax. • The Next IMF Phase: The IMF's final two program reviews will heavily target administration and governance, aligned with its 2023 Governance Diagnostic Assessment highlighting substantial corruption risks due to weak performance monitoring. • Proposed Strategy: Based on provisional program targets, the IRD is developing a modernization strategy and a Medium-Term Revenue Strategy. Key priorities include strengthening risk-based compliance, expanding pre-filled tax returns, auditing high-wealth individuals, and administering all taxes exclusively through RAMIS to ensure long-term, fair, and sustainable revenue collection.