- Sri Lanka needs to intensify revenue collection for macroeconomic stability and sustainable growth
- The tax to GDP ratio in Sri Lanka is one of the lowest in the world at 7.3%
- The IMF aims to raise the tax to GDP ratio to 14% by 2026
- Countries tend to experience higher growth once tax revenue reaches around 15% of GDP
- Failure to reach revenue targets delayed the release of IMF funds
- Budget 2024 aims to increase tax revenue to 12.1% of GDP, with a significant portion coming from Value Added Tax (VAT)
- VAT is adopted by over 160 countries and accounts for a significant portion of total tax collection
- In Sri Lanka, VAT revenue as a percentage of GDP has declined to 2% in 2022
- Ad hoc policy changes and weak tax administration have contributed to the decline in VAT revenue in Sri Lanka.
Source: ft.lk
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
