Sri Lanka tax administration 20 years behind Africa, says Prof. Mick Moore

PROF. Mick Moore said Sri Lanka's tax administration is two decades behind many African countries and must shift its focus to large-scale evaders if it is to close the revenue gap, at the 'Debt and Tax Dialogue' forum organised by Arutha Research recently.

- DEVAN DANIEL

"Customs in Sri Lanka, in terms of its organisation and its work methods, is about 20 years behind many African countries. It's not very nice to hear, but to be honest, the Inland Revenue Department (IRD) is pretty much in that same ballpark. It’s not that far away," he said.

He pointed to the Colombo Municipal Council, where only 20,000 of 110,000 businesses pay local property taxes, as an example of the scale of noncompliance, while the IRD remains constrained by outdated practices, weak recruitment, and poor training.

Prof. Moore is a political economist and a Professorial Fellow at the Institute of Development Studies. His work focuses on taxation and governance in developing countries like Sri Lanka.

From 2010 to 2020, he served as the Founding Chief Executive of the International Centre for Tax and Development.

The IRD remains under-equipped to address the scale of tax evasion and avoidance despite a modest recovery in revenue collection, according to Prof. Moore.

The Finance Ministry has said that the IRD had achieved 53% of its full-year target of Rs. 2.2 trillion during the first seven months of the year, while Customs had achieved 57% of its full-year Rs. 2.1 trillion target, and the Excise Department achieved 52% of its Rs. 839 billion full-year target.

Revenue from Excise duty on motor vehicles surged 528% to Rs. 193 billion in the first seven months of 2025, up from Rs. 31 billion a year earlier.

But Prof. Moore cautioned that, although the tax-to-GDP ratio has risen to about 15.1%, broadly in line with International Monetary Fund (IMF) targets, sustaining this will be difficult without structural reforms.

"It won't stay at that level because some of that is by raising rates, but some of it is the bonus from delayed motor vehicle imports.