By The Pulseline News Desk
Sri Lanka’s tax administration must undergo a major digital and institutional transformation if the Government is to strengthen revenue collection and maintain fiscal stability, the Parliamentary Committee on Ways and Means has stressed.
The Committee, while reviewing the country’s fiscal performance and tax revenue collection, has identified digitalisation, expansion of the taxpayer base, stronger compliance and improved institutional capacity as key priorities for reforming the tax system.
The Committee has met recently in Parliament under the chairmanship of member of parliament (MP) Wijesiri Basnayake, with officials from the Ministry of Finance, Planning and Economic Development and the Inland Revenue Department participating in the discussions.
Officials had briefed the Committee on the implementation of the 2026 tax plan, revenue collected up to June 30, estimates under different tax categories and the level of taxpayer compliance.
The discussions also examined the progress of the Revenue Administration Management Information System (RAMIS), taxation of digital services and several administrative challenges affecting the efficiency of revenue collection.
Digitalisation key to improving tax collection
Committee members had stressed that modern technology should play a greater role in simplifying tax administration and improving compliance.
They had called for the further expansion of electronic services, including online taxpayer registration, filing of tax returns and tax payments, while emphasizing the need for better integration of data held by different government institutions.
Improved data sharing, the Committee had noted, could help authorities obtain a clearer picture of economic activity and identify taxpayers who may currently be outside the formal tax system.
The discussions come as Sri Lanka continues efforts to strengthen domestic revenue mobilisation following the fiscal pressures that contributed to the country’s recent economic crisis.
While members had acknowledged that recent policy measures and improvements in revenue management had contributed to greater stability in the fiscal sector, they had stressed that sustaining this progress would require deeper structural reforms rather than relying solely on changes to tax rates.
Informal economy a major challenge
One of the key challenges identified during the meeting was the difficulty of bringing informal economic activity into the formal tax net.
The Committee had highlighted the need to expand the taxpayer base while ensuring that the tax administration has the technological and institutional capacity required to monitor economic activity effectively.
Members had also pointed to shortcomings in existing technological infrastructure and difficulties in integrating data between institutions.
The development of specialised human resources was identified as another priority, particularly as tax administration becomes increasingly dependent on digital systems, data analysis and technology-driven compliance mechanisms.
RAMIS to play a central role
The future development of RAMIS was also a major focus of the discussions.
The Committee had considered measures to strengthen the system and expand its role in tax administration, alongside increasing access to electronic registration, filing and payment facilities.
A more integrated digital tax administration system could reduce administrative burdens for both taxpayers and officials while improving the Inland Revenue Department’s ability to monitor compliance and detect discrepancies.
However, members had stressed that technology alone would not be sufficient. Institutional capacity, reliable data, skilled personnel and effective coordination between government agencies would also be necessary to make the reforms successful.
Revenue stability and broader reforms
The Committee’s recommendations highlight a broader challenge facing Sri Lanka: increasing government revenue without placing excessive pressure on taxpayers who are already within the formal system.
Expanding the tax base, particularly by bringing more economic activity into the formal sector, could allow the Government to improve revenue collection while creating a more equitable distribution of the tax burden.
The Committee had therefore stressed that the next phase of tax reform should focus not only on collecting more revenue, but also on creating a simpler, more transparent and technology-driven tax administration system.
With the 2026 tax plan and revenue performance under review, the emphasis on RAMIS, digital services, data integration and taxpayer expansion signals a shift towards a more modern approach to revenue administration.
The challenge now will be turning these recommendations into functioning systems capable of improving compliance, reducing administrative inefficiencies and delivering sustainable revenue growth.
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