'IRD on dangerous and scary path'

Tax experts accuse IRD of encroaching on policymaking, secretive legal interpretations and eroding Parliamentary intent, CA Sri Lanka urged to make ‘a huge noise’ as practitioners warn of growing uncertainty, poor administration and mounting taxpayer disputes

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FRESH from delivering record tax collections in 2025 and on course to exceed revenue targets again this year, the Inland Revenue Department (IRD) came under sustained criticism from leading private sector tax professionals at the CA Sri Lanka 5th Annual Economic and Tax Symposium over what they described as an expanding role in policymaking and tax interpretation.

The Department was accused of straying beyond its role as tax administrator by shaping policy, issuing opaque interpretations of tax laws, and fostering an administrative culture that undermines certainty for taxpayers. Speakers also pointed to poor taxpayer service, delayed refunds, and inconsistent administrative practices, urging the country’s premier accounting body, CA Sri Lanka, to press more forcefully for reform.

Their concerns extended beyond administrative shortcomings to what they saw as a broader institutional shift in the relationship between Parliament, policymakers, and the tax authority, warning that predictable administration, rather than even more legislation, would do more to improve compliance and strengthen Sri Lanka's investment climate.

John Keells Group Head of Corporate Structuring, Strategic Tax and Social Entrepreneurship Nisreen Rehmanjee warned that policymaking was increasingly being delegated to the IRD, blurring the distinction between Parliament's role in making tax law and the Department's responsibility for administering it.

"That is a very dangerous journey we are going into because administration and policy has to be different. It has to be separate because administrators, for good or bad, their focus is going to be collection of taxes. Policy will have to set the framework within which they want it operating," she said.

Rehmanjee argued that the problem extended beyond delegated powers.