Sri Lanka Should Plug Revenue Holes: IMF

by Ulrika Lomas, Tax-News.com, Brussels

16 August 2017

Sri Lanka is planning to revamp its tax system to reverse a steady erosion of its tax base over the past two decades, the International Monetary Fund (IMF) has said.

The country is planning to submit a new Inland Revenue Act to parliament, which would broaden the tax base by removing excessive tax exemptions, rationalize corporate tax incentives to establish an investment-oriented regime, and strengthen administrative powers.

The IMF said that "further revenue mobilization will rest on stronger tax administration and value-added tax (VAT) reforms."

Sri Lanka's tax-to-GDP ratio is one of the lowest in the world, and the nation's tax efficiency ratio is also below that of comparable countries, particularly for VAT, the IMF said.

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