Interim Budget 2022 has revised estimates of the Gotabaya Rajapaksa regime’s budget for this year forecasting the revenue drop to to Rs. 2 trillion from Rs. 2.2 trillion.
Of that, tax revenue is Rs. 1.85 trillion, down from Rs. 1.98 trillion. Income tax is estimated to be Rs. 558 billion, higher from Rs. 496 billion from original estimate.
Taxes on Goods and Services to be lower at Rs.972 billion despite the increase in VAT from Rs. 1 trillion previously. Non-tax revenue revised upwards to Rs. 232 billion from Rs. 226 billion.
The Government announced the Value Added tax (VAT) will be increased from 12% to 15% from Thursday but lowered its overall revenue estimate for 2022.
The increase in the VAT was the only major revenue measure, whereas prior to the interim Budget presentation the private sector was worried by higher or new taxation.
President Ranil Wickremasinghe delivering his budgeT speech in parliament said a number of tax reforms pertaining to Income Tax, Value Added Tax (VAT), Telecommunication Levy and Betting and Gaming Levy have already been approved to be implemented.
Some of these tax proposals have already been implemented.He also said most revenue proposals introduced in May 2022 will be effective from 1 October 2022.
“The implementation of these proposals will help increase the revenue. It will gradually reduce the quantum of monetary financing for Government expenditure,” Wickremesinghe said.
The President also announced that the 2023 Budget will present new revenue enhancing proposals.
In terms of tax administration, Wickremesinghe said efforts to increase the revenue, tax administration must play a pivotal role in enhancing the tax collection efficiency, strengthening tax compliance and preventing tax avoidance.
In addition to the already existing requirements, the President proposed to introduce compulsory tax registration for all residents who are above 18 years of age without considering their annual income and tax-free thresholds.
He also said the Government is committed to implement the recommendations in the Final Report of the “Presidential Commission of Inquiry into Sri Lanka Customs”. This will strengthen corporate, administrative, and operational processes of Sri Lanka Customs to discharge its responsibilities effectively and efficiently.
President also said measures will be taken to enhance non-tax revenue, including royalties received for Government assets.
He proposed to take actions to attract foreign investors and/or technology holders to establish joint ventures with Sri Lankan partners for industrial investments with advanced technologies to ensure better utilization of our mineral resources and increase value addition without jeopardizing the interests of the national economy and the sustainable use of resources.
The President said the online revenue collection program will be implemented in all local Government authorities before the end of 2022.
