මෝඩ ගෝඨා වැඩ පෙන්නයි: Registered taxpayers dropped by 55% in 2021

monson

Well-known member
  • May 7, 2007
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    • IRD cites Advanced Personal Income Tax as reason
    • Tax compliance not at pre-pandemic level even by end-2021
    • Tax-to-GDP ratio at 7.7%, one of the lowest in the world
    By Imesh Ranasinghe

    Sri Lanka’s registered taxpayers have dropped by 55% by the end of 2021 compared to 2020, mainly due to the revision of the rules regarding employees required to pay tax under the Advanced Personal Income Tax (APIT), which replaced the Pay As You Earn (PAYE) tax at the end of 2020, according to the 2021 annual report of the Inland Revenue Department.

    Accordingly, the number of registered taxpayers, which totalled 1.13 million at the end of 2020, reduced to 677,613 due to the revision of the APIT guidelines, which then reduced to 507,095 by the end of 2021, as the number of employees paying income tax under APIT decreased from 664,828 to 32,702 after the tax’s monthly income threshold was lifted to Rs. 250,000.


    Moreover, the report shows that the compliance rates of Corporate Income Tax (CIT), Individual Income Tax (IIT), and Partnership Income Tax (PIT), despite a grace period being granted until 31 December 2021, were at 26% and 20% for the corporate sector and non-corporate sectors, respectively. This compliance rate had not reached pre-pandemic levels, even by the end of 2021.

    Further, the default tax amount as of 31 December 2021, as the percentage of the revenue estimate given by the Ministry of Finance was 17.6%, The facility to write off tax arrears was granted to the IRD Commissioner General under Section 58 (1) of the Inland Revenue (Amendment) Act, No. 10 of 2021 and part 2 of the Finance Act No. 10 of 2021 as tax relief measures to facilitate post-Covid-19 economic recovery.

    The report showed that Sri Lanka’s tax-to-GDP ratio of 7.7% in 2021 was one of the lowest in the world and the lowest reported since Independence, while highlighting that the system within the country fails to gather sufficient tax revenue for the State coffers. The tax-to-GDP ratio was at 11.6% in 2019 and 8.1% in 2020.

    According to the International Monetary Fund (IMF), the tax-to-GDP ratio should be at least 15% to achieve sustainable economic growth.

    The IRD said that the newly revised Inland Revenue Act aims to widen the net tax revenue and to increase the direct tax component in the coming two to three years by reducing the number of indirect taxpayers. In terms of the above, the IRD had exceeded the given target of opening 3,096 tax files, as in 2020, 11,792 income tax files were opened.

    - https://www.themorning.lk/registered-taxpayers-dropped-by-55-in-2021/
     
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    KandyMalli

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  • Feb 15, 2018
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    ගොනා හින්දනේ අයියගේ ගැටේට අහුවෙලා කෙලෝ ගත්තේ 😂
     

    monson

    Well-known member
  • May 7, 2007
    12,675
    3,349
    113
    • Employees registered to pay monthly tax on their incomes declined by 97% from 2019-2022
    • The number of companies registered for VAT fell by 69% from 2019-2022
    image_f76d40a787.jpg

    Significant changes made to the country’s tax system in the year 2019 resulted in the tax base shrinking considerably, and have contributed to the current grim state of the national economy, according to PublicFinance.lk run by Colombo-based think tank Verité Research.
    A narrow tax base increases tax administration costs and reduces revenue collection.
    The number of employees registered to pay monthly tax on their incomes reduced by 97 percent from 2019-2022.

    This was mainly due to the replacement of the mandatory Pay-As-You-Earn (PAYE) tax system with an optional Advanced Personal Income Tax (APIT) system and the increase in the tax-free threshold by 6 times.
    There was also a change in the system to pay taxes on interest income. It was initially done via withholding tax, which was replaced with Advanced Income Tax for 2020. This led to a reduction in agents registered to pay taxes on interest income by 63 percent for the same time period.

    Further, by increasing the Value Added Tax (VAT) registration threshold from Rs.12 million per annum to Rs. 300 million per annum, the number of companies registered for VAT fell by 69 percent from 2019-2022.

    image_aae8fb6499.jpg

    According to PublicFinance.lk, reinstating the mandatory PAYE tax and the Withholding Tax at 10 percent as a prepayment on interest, fees and other incomes, would help Sri Lanka regain its lost tax base and gain an additional revenue of Rs. 184 billion in 2023.


    Sri Lanka announced major tax policy changes in January 2020, which led to a sharp reduction in the tax revenue from 11.6 percent of GDP in 2019 to 8.1 percent of GDP in 2020. The reduction in revenue subsequently led to a fiscal position that made debt servicing unsustainable, and to a credit rating downgrade. In turn, it also locked Sri Lanka out of global financial markets.


    PublicFinance.lk is a platform for public finance related information in Sri Lanka. This platform intends to bridge the gap in information and understanding of public finance by providing insights and analysis on Sri Lanka’s public finance.

    - https://www.dailymirror.lk/business...se-to-shrink-says-PublicFinance-lk/273-244691

    බුජ්ජිමතුන් Income tax ගෙවන එක 0ටම අඩුකරගන්න මෝඩ ගෝටෙක් ගෙනල්ලා රට බංකොලොත් කරගෙන දැන් ඒක ගොඩදාන්න හදනොකොට අඬනවා ආපහු :lol:
    ------ Post added on Jan 25, 2023 at 2:21 PM