In a country of 22 million people and 100,000 companies, only 665 people pay income tax!

Mahindananda Aluthgamage revealed in Parliament yesterday (22) that in a country of 22 million people, the total number of individuals and companies who paid income tax in 2021 was only 665.

Of those, only 137 individuals paid income tax of more than five million rupees that year.

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The member pointed out yesterday in Parliament that by the year 2020, among the 22 million people in Sri Lanka, only 292,325 people have opened tax files, and if the Inland Revenue Department is functioning properly, there is a possibility of accruing revenue of about 4 trillion rupees as tax. The member pointed out yesterday in Parliament, while joining the adjournment debate on how to increase the state’s revenue.

The member who spoke further pointed out that the VAT alone, if collected properly, would give the government coffers an income of 1000 billion rupees. He pointed out that out of 105,000 companies in 2021, 15069 have paid tax and only 343 accounts for 82 per cent of that.

Mr. Mahindananda Aluthgamage, who spoke further, said,

“There are 9070 establishments in this country that have obtained registration numbers for VAT. Among them, 3020 files have been opened. Among those who opened the files, 185 have filed VAT returns in 2021.

According to the Income Tax Department, out of all the companies and individuals in the country, only 665 people pay income tax.

Let me give an example regarding capital gains tax. A record of a person who sold a plot of land in Galle Fort. This person bought this land for 250 million. He sells it for 2,000 million.The profit is Rs 1750 million. Despite having such a large profit margin, he only pays Rs two million in income tax.

Due to this situation, the income tax department has been able to earn only 357 million from the capital gains tax. A capital gains tax can generate over a trillion in revenue. There are 10 types of taxes in the Income Tax Department. There are five acts, and there is a question about whether even one of them is properly implemented.

There is a rule in the Income Tax Act that an expatriate worker must remit money to banks during the period of employment as per the Income Tax Act. But it is not happening. If these expatriate workers send money properly, more than 300 million dollars can be earned. He said.