By: Staff Writer
November 27, Colombo (LNW): Sri Lanka’s promise of a fresh start against corruption is under growing scrutiny as allegations mount that the country’s wealthiest tax evaders are enjoying political protection. While the new administration publicly pledges to cleanse state institutions, critics say enforcement overwhelmingly targets the powerless while billionaires escape accountability.
Former Minister Patali Champika Ranawaka recently made explosive claims: individuals responsible for over Rs. 1 trillion in unpaid taxes remain “fully protected” by the government. He revealed that 4,570 people owe more than Rs. 100 million, including 90 individuals whose unpaid taxes exceed Rs. 1 billion each. Despite these massive sums, none have faced legal action.
Instead, Ranawaka alleges the government is pursuing trivial cases involving the distribution of spectacles or placing of advertisements while billion-rupee tax evaders remain untouched. He also highlighted another troubling issue: individuals who defaulted on Rs. 700 billion in loans from state banks continue to operate freely under government protection.
National data supports these concerns. By late 2025, the Inland Revenue Department confirmed that unpaid taxes had exceeded Rs. 1 trillion, a steep rise from 2024. Public Finance Lanka attributes this to unresolved assessments, outdated audits, and a backlog in tax litigation. Meanwhile, new VAT hikes and expanded payroll tax burdens disproportionately affect middle-income earners.
Experts argue that Sri Lanka’s ongoing struggle to raise its tax-to-GDP ratio still one of the lowest in Asia is largely the result of systemic evasion among the ultra-wealthy. Sectors such as casinos, large-scale retail, construction, and luxury imports have long been accused of understating revenue and exploiting loopholes.
The government disputes claims of inaction. The IRD launched criminal probes into VAT evasion in mid-2025 and initiated asset seizures against firms with long-standing arrears. President Anura Kumara Dissanayake has vowed to restructure revenue departments and claimed he possesses a list of 200 high-value tax evaders under review.
However, critics argue these announcements amount to political theatre. They point out that no major evaders have been prosecuted, no assets belonging to billionaire businessmen have been seized, and no travel bans have been issued against top defaulters. In contrast, small traders, middle-income professionals, and minor offenders continue to receive aggressive enforcement notices.
Sri Lanka’s fiscal recovery depends not on new taxes imposed on ordinary citizens, but on the crackdown of entrenched tax evasion networks that have operated for decades. As long as the wealthy remain shielded while the poor shoulder the burden, genuine reform will remain out of reach.