The government has published the objectives of its Medium-Term Revenue Strategy for 2027-2031, setting a target of raising tax revenue to 17% of GDP by 2031 through a mix of administrative and policy reforms.
The strategy was published by the Ministry of Finance, Planning and Economic Development and forms part of Sri Lanka’s commitments under the International Monetary Fund-supported programme, NewsFirst reported.
The document says Sri Lanka has already made a significant fiscal adjustment since 2022, with the tax-to-GDP ratio nearly doubling by 2025. The 17% target sits well above the 14.2% of GDP that the Medium-Term Fiscal Framework currently projects for the 2027-2031 period; the strategy seeks to lift sustainable revenue beyond that baseline.
Priority commitments
Among the measures set out are:
- Limiting new corporate income tax incentives to exceptional cases
- Reviewing the personal income tax system to better capture high-income earners
- Assessing the impact of VAT across different income groups
- Gradually phasing out para-tariffs, with replacement measures where needed
A major focus is modernising tax administration through stronger digital systems, improved data sharing, risk-based compliance management and better taxpayer services across the Inland Revenue Department, Sri Lanka Customs and the Excise Department. Authorities also plan to strengthen taxpayer registration and improve information matching.
The reforms are expected to widen the tax base by reviewing exemptions and concessions, improving the taxation of professionals and businesses, drawing more informal and digitally enabled activity into the system, and strengthening the taxation of property, capital gains and high-value transactions.
On fairness, the strategy says taxpayers in similar economic circumstances should be treated consistently, and that reforms will be coordinated with social protection measures to limit the burden on vulnerable households while avoiding poorly targeted exemptions.
The government also plans annual assessments of revenue performance, with compensating measures to be introduced where revenue targets are missed. Near-term gains are expected to come mainly from stronger administration and compliance, with policy reforms supporting revenue growth over the longer term.
A gap in the published account
NewsFirst lists the strategy as built around five objectives but enumerates only four — modernising revenue administration, improving the efficiency and competitiveness of the tax system, strengthening governance and predictability, and sustaining revenue mobilisation. Objective 3 is absent from the report, and this desk has not seen the underlying document, so it is not reproduced here.
The report does not give a date for the strategy’s formal adoption, say whether it requires parliamentary approval, or set out the revenue expected from any individual measure.
