The Inland Revenue Department (IRD) has warned that it will initiate criminal proceedings against individuals and entities that wilfully fail to meet their tax obligations.
The Department said the authority to take legal action has been vested in the Commissioner General of Inland Revenue under the Inland Revenue (Amendment) Act, No. 11 of 2026.
Under the provisions, a person found guilty of wilful default may be liable to a fine not exceeding Rs. 400,000, imprisonment for a term not exceeding six months, or both.
The warning signals a tougher enforcement stance as authorities work to widen the tax net and lift government revenue, a central commitment under Sri Lanka’s economic reform programme. Improving tax compliance and revenue collection has been a recurring condition in the country’s efforts to stabilise public finances following its debt crisis.
The IRD urged taxpayers to regularise their affairs and settle outstanding liabilities to avoid prosecution, stressing that the new powers allow the department to pursue deliberate evasion through the courts rather than relying solely on administrative penalties.
