Govt. launches “Tax Power 2026” drive to drive voluntary compliance

• Tax evasion still significant issue, IRD official says 40% of taxable transactions cash based and untraceable

Presidential Secretariat Revenue Administration and Modernisation Unit Director Asitha Munasinghe

IRD Commissioner and Media Spokesperson Nandana Kumara Athukorala

The Government will launch a nationwide campaign next month to encourage voluntary tax compliance and improve public attitudes towards taxation, as part of broader efforts to strengthen the country’s revenue system.

The campaign, titled “Tax Power 2026” (Badu Shakthi 2026), will be launched in July under the Revenue Administration, Reform and Modernisation Unit of the Presidential Secretariat.

Presidential Secretariat Revenue Administration and Modernisation Unit Director Asitha Munasinghe said many Sri Lankans viewed taxes negatively and the campaign aimed to change that perception.

“Sri Lankans are reluctant to pay taxes. They fear taxation and see it as a punishment. The main objective of this program is to transform that negative attitude into a positive one,” he said.

He said the initiative sought to build a culture of voluntary tax compliance by helping the public understand how tax revenue is used to fund public services and national development.

Munasinghe also pointed out the importance of taxation in sustaining a resilient economy, noting that improved tax compliance had created the fiscal space that enabled the Government to respond to the impact of Cyclone Ditwah and the economic fallout from the Middle East conflict.

The campaign will bring together the Inland Revenue Department, Sri Lanka Customs and the Excise Department.

The main program will run from 6 to 10 July, beginning with an opening ceremony at the Presidential Secretariat under the patronage of the Speaker of Parliament.

During the week, Inland Revenue Department officials will conduct public awareness programs in selected towns where regional offices are located, while a central seminar on key tax reforms will be held for tax professionals, taxpayers and the public. Similar seminars are also scheduled in Anuradhapura, Galle and Matara.

A dedicated “Youth Day” will focus on improving tax awareness among young people, while the final two days of the campaign will feature mass media and social media outreach.

Inland Revenue Department Commissioner and Media Spokesperson Nandana Kumara Athukorala said the campaign would educate taxpayers and the public on recent changes to the tax system through awareness programs conducted across selected cities.

Kumara said that since Tax Identification Numbers (TIN) became mandatory since 1 January 2024, the IRD has issued nearly 13 million TINs with personal income tax files increasing to over 1.2 million to-date. The TIN has been made mandatory when applying for a bank account, credit cards, driving licence, registering motor vehicles and land, applying for building plans and investing in listed shares. 

Kumara also said that the Government’s decision not to reduce the VAT threshold to Rs. 36 million from Rs. 60 million will not impact IRD’s annual revenue collection target. “This is because we have already exceeded the six months target by about 59%, and we don’t expect the unchanged VAT threshold to have a significant impact on the annual target,” Kumara said.

He said tax evasion continues to be significant issue, with over 40% of all taxable transactions in the country believed to be cash-based and untraceable. “We believe tax evasion is around 40%, it’s an estimate, but we do not have an estimated rupee value,” Kumara told journalists.