The Inland Revenue Department (IRD) has reported that Sri Lanka’s total collectable tax defaults and penalties reached Rs. 175.6 billion by the end of 2024, underscoring the country’s ongoing fiscal challenges and enforcement gaps.
According to the IRD’s Annual Report for 2024, the sum includes Rs. 96.4 billion in overdue taxes and Rs. 79.2 billion in penalties.
A significant portion of this amount, Rs. 59 billion, was attributed to value-added tax (VAT) defaults alone.
“These collectable taxes represent confirmed liabilities that the IRD expects to collect,” the report stated, adding that these are assessments either unchallenged by taxpayers or resolved through the appeals process.
The IRD acknowledged that the persistent economic and structural difficulties experienced since 2019 have significantly contributed to the accumulation of arrears. The IRD noted it is expediting its recovery efforts to address the mounting overdue tax liabilities.
Among the total collectable amounts, defaulted VAT taxes and associated penalties stood at Rs. 113.8 billion.
Defaulted income taxes amounted to Rs. 34.9 billion, with penalties on those defaults reaching Rs. 22.8 billion.
Additionally, approximately Rs. 2 billion in tax and penalties were overdue under the Pay-As-You-Earn (PAYE) system.
The IRD highlighted that taxes currently under legal dispute had reached an extraordinary Rs. 974.3 billion by end-2024.
Of this, disputed income tax alone accounted for Rs. 347.1 billion, with an additional Rs. 199.5 billion in penalties tied to those disputed amounts.
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