Sri Lanka is grappling to raise revenue from ad hoc tax policy changes without gaining optimum use from the existing tax structure before going for new taxes, a budget 2022 analysis report released by the Parliamentary Committee on Public Finance revealed.

The committee expressed its doubt on collecting more revenue from new taxes on a revenue administration that is already stretched when there is ample room to revise thresholds and rates on several existing taxes.

It has been observed that the additional tax revenue could have been raised with the minimal amendments to existing legislation.

In addition, taxes with retrospective effect, such as the surcharge tax, are not good signals for prospective investors, the committee pointed out.

The assumptions and actions that have been presented in the budget to justify this significant increase in revenue expectation have been evaluated by the committee while making its observations.

The majority tax revenue collection is to be from one-off surcharge tax, the committee observed.

Proposed surcharge tax does not indicate the tax base on which the surcharge tax will be imposed. Given past experience it is unlikely that the expected Rs. 100 billion can be collected through the proposed policy changes.

The committee also noted that revenue from corporate tax would also depend on the economy achieving the growth target of 5 per cent as estimated but there are doubts in achieving the expected target.

The Special Goods and Services Tax (SGST) is estimated to bring in an additional Rs. 50 billion in revenue in 2022.

Revenue from taxes on telecommunications, liquor, cigarettes, betting and gaming and vehicle imports proposed to be consolidated under the SGST has significantly declined over the past three years.

Given the already difficult macroeconomic environment, along with ad hoc tax policy changes raising the additional revenue estimated at Rs 50 billion seems a difficult task, the committee observed.

Cash inflows by way of revenue and other receipts are expected to come down under the present economic setback while all efforts are being made to control cash outflows in the coming months, official sources predicted.

Sri Lanka steps into the digital business arena in a big way promoting Blockchain technology to assist incubate startups in Web 3.0, Blockchain and Metaverse.

This new digitalisation of commerce initiative has been taken by the State Ministry of Digital Technology under the purview of  the Ministry of Development Coordination at theTreasury.

With Sri Lanka recently branching out into crypto payments, NFT (non-fungible token) auctions, and crypto investments, new business ventures for startups have begun mushrooming in small scale in the country in recent times, digital industry sources said. 

Blockchain and crypto currency have become more than just a catchphrase today, in Sri Lanka with crypto is being used as payment for goods and services along with cash and card.  

Blockchain is a public ledger that records transactions with utmost security, transparency and permanence, including transactions made through crypto currency. 

 Non-Fungible Token, basically means that it’ is a one-of-a-kind digital asset that belongs to individuals only.

These words and definitions are alien to people of Sri Lanka as it is not in practice widely in the country, an expert in block chain technology said adding that after the popularisation of technology it will become a normal tool of day today transactions, an expert in digitalisation of commerce said.

A new exciting company called “Grow” recently opened its headquarters in Colombo to incubate startups in Web3.0,           Blockchain, and Metaverse.

The main task of this company is to attract the best entrepreneurs in these new digital frontiers by providing investment and marketing assistance along with specialised consultancy services.

The company actively invests in startups that focus their business on the blockchain environment and the World Wide Web metaverse to create value.

There is a great opportunity for projects in the seed phase to become important players in the metaverse with the support of incubation and funding programs, a top official of the financé ministry said.

 Global conditions intensify the focus and subsequent investment in the development of online solutions for remote work, match play, entertainment, education and the development and development of Virtual Reality (VR) in the middle of the Augmented Reality (AR) phase.

 While many people associate the metaverse with recreation, it also has plenty of potential for online work and more.The surge in interest and technology in the Metaverse has breathed new life into VR / AR tools. Immersive multimedia platforms that allow users to create a digital universe ,. are currently under development. With the right vision for the future, early-stage projects can develop into the next generation of technology leaders, he added