📈 Sri Lanka Tax Revenue Hits Rs. 5.05 Trillion, But Indirect Tax Imbalance Widens

Sri Lanka’s tax-to-GDP ratio rose to 15.4% in 2025 as total tax revenue reached Rs. 5.05 trillion (up from Rs. 1.75 trillion in 2022). However, reliance on consumption taxes leaves the direct-to-indirect tax mix heavily skewed at 22.6% vs 77.4%. • Tax Breakdown & Revenue Figures: • Total Tax Revenue: Rs. 5.05 Trillion (2025) • Income Tax (Direct): Rs. 1.14 Trillion (22.6% of total, up 11.0% YoY) • Indirect Taxes (Goods, Services & External Trade): Rs. 3.91 Trillion (77.4% of total) • Tax Ratio: Rs. 3.4 collected in indirect tax for every Rs. 1 of direct tax • Drivers of Revenue Growth: • VAT collections surged 33.4% YoY to Rs. 1,746.9 billion, driven by a 49.2% jump in import VAT. • Excise duty on motor vehicles skyrocketed to Rs. 471.8 billion (up from Rs. 58.6 billion in 2024) following the lifting of import suspensions in Feb 2025. • Registered taxpayer files grew 19.2% YoY to 1.3 million. • Global & Regional Benchmarks: • Indirect taxes account for 70.8% of Sri Lanka's revenue compared to the Asia-Pacific average of 50.0% and the OECD average of 31.2%. • Direct taxes (corporate income tax & personal income tax) make up only 23–27% of tax revenue, well below the Asia-Pacific average (38.8%) and OECD average (35.6%).