President draws red line on tax relief

• Directs businesses to pay fair taxes
• Says no one should ask for tax revisions
• Call comes amid alarmingly low tax compliance
• Stresses there is reluctance to pay taxes and an attempt to avoid taxes 

Anura Kumara Dissanayake

Sri Lanka’s private sector received a firm directive from President Anura Kumara Dissanayake yesterday, who said businesses “must pay fair taxes” and not seek tax revisions for industry development.
While being affirmative to the businesses, which have called for tax relief whenever possible, Dissanayake stated that the government would ensure infrastructure and regulatory support, so that there is a conducive environment.
“If you do not have three-phase electricity for your industry, we will provide electricity. If you do not have suitable land to run your business, we will buy land. If you do not have water facilities, we will provide them. If there are no suitable roads, we will build roads. But pay taxes,” he told a high-profile gathering at the launch of National Tax Week in Colombo yesterday.
Dissanayake also warned that the current tax system, which is central to Sri Lanka’s recovery effort, must not be undermined.
“No one should ask for tax revisions,” he said, assuring that legal frameworks and public service efficiency would be strengthened to support business operations.
Dissanayake’s call comes amid alarmingly low tax compliance. Only 43 percent of registered companies submitted returns last year. Just 23 percent of individual income tax filers reported for 2023/2024, while PAYE compliance stood at a mere 18 percent.
“None of this data exceeds 50 percent. It shows a reluctance to pay taxes and an attempt to avoid taxes,” Dissanayake said.
He attributed the systemic evasion to a deep erosion of public trust in how tax funds have been historically managed. Dissanayake stressed that the first thing that needs to be done is to give the people the assurance that their tax money would be properly used for essential purposes.
“That is the responsibility of me and our political authority. I give you the assurance that the political authority will not cheat or waste a single rupee of any tax money you pay,” he said.
Meanwhile, he also pointed out that the government is confronting a highly “organised shadow system” and gave assurance that it would be dismantled.
“This issue regarding public funds is not merely a matter of paying or collecting taxes. It is a deeper, networked problem. Pointing fingers at individual institutions will not solve it because it is an interconnected system.
“Unless this shadow system is broken, the country will not be able to move even an inch forward. That is why we are committed to dismantling this corrupt network,” he said.
Dissanayake went on to stress that one of the main reasons for the collapse of the economy was the failure to properly reform the tax system and collect a fair amount of tax revenue.
“Over different periods, tax reforms were carried out to satisfy various political agendas rather than economic principles. This politically-driven approach to tax reform created a major problem. I assure you that we do not make any economic decisions based on political principles,” he said.