Monday, 22 April 2019 05:47

Sri Lanka’s budget 2019 over estimates corporate tax revenue

Sri Lanka’s corporate tax has been constantly over estimated and on average it has fallen short of estimates during the last few years, Parliamentary Committee on Public Finance (COPF) claimed.

The Corporate Tax Rate stands at 28 percent and it averaged 31.95 percent from 1997 until 2018.

Sri Lanka 2019 Budget has over-estimated the tax revenue making the task of tax collection authorities ‘challenging’ and in this context the government should consider additional measures if planned revenue didn’t come in, the Committee (COPF) has warned.

The committee has evaluated and analysed the 2019 budget revenue and expenditure proposals and submitted its report with observations to the parliament recently.

The report assesses that the government’s revenue projection is too optimistic as the Ministry of Finance has a poor track record of making budget predictions, the committee report revealed.

Corporate taxes are expected to grow by 15 percent in 2019 to Rs. 183 billion, from the estimated Rs. 159 billion in taxes collected in 2018 under existing policy, Finance Ministry data showed.

This tax component will account for 8.8 percent of tax revenue and principal changes have been expected on the collection of corporate tax in accordance with the new Inland Revenue Act.

According to the Finance Ministry explanations the full revenue benefit of implementing the IRD Act involving rate changes of dividend and remittance taxes and strengthening of the tax administration, including tax auditing under the RAMIS system had been anticipated.

Analysis of previous years’ estimates show that corporate tax has been constantly overestimated, and on average fallen short of estimates by 6.4 percent, COPF said.

The over-estimate in 2018 was as high as 18.4 percent. The past average annual growth rate of 14.3 percent is proximate to the growth rate anticipated for 2019, Finance Ministry data showed.

(LI NEWS)

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