📊 Sri Lanka Tax Revenue Hits Rs. 1,131 Bn, But Salaried Earners Bear Heavy Burden

• Overall Figures & Revenue Performance In 2025, Sri Lanka’s Inland Revenue Department (IRD) collected Rs. 1,131.33 Bn in total income tax, exceeding its target by 1.41% and growing +10.47% YoY. Corporate income tax accounted for Rs. 669.64 Bn (59% of total), while non-corporate segments contributed Rs. 461.68 Bn (41%). • APIT & Middle-Income Squeeze Out of 2.55 million analyzed employee records, only 622,419 (24.4%) exceeded the threshold and paid Advance Personal Income Tax (APIT): • Earners making Rs. 1.2M–3.7M annually represent 63.5% of APIT taxpayers but contribute 20.5% (Rs. 39.36 Bn) of total APIT. • Earners above Rs. 3.7M annually represent 13.4% of taxpayers and contribute 78.4% of total APIT. • Top tax bracket of 36% is reached at Rs. 4.3M/year (~Rs. 358,333/month), heavily compressing the middle-income salaried workforce. • Workforce Coverage & Compliance Gap • Workforce Net: APIT covers only ~2.55 million of Sri Lanka’s 7.95 million total employed workforce, leaving ~68% (~5.4 million workers, including self-employed and informal labor) outside automatic tax withholding. • Filing Rates: On-time filing for individual income tax returns stood at just 25%. Non-large employers logged a low 15% on-time filing rate for APIT, compared to 65% among large corporate entities. • Key Policy Need The IRD relies disproportionately on automatically withheld salaries from formal employees, highlighting an urgent need to widen the tax base across self-employed and high-wealth segments.