The Inland Revenue Department is outperforming its revenue collection targets, according to Presidential Secretary Dr. Nandika Sanath Kumanayake, who suggests improved performance could enable tax relief measures if compliance and the tax base continue to expand.

The Inland Revenue Department is currently collecting revenues above its targets, creating potential fiscal space for tax relief initiatives, according to Presidential Secretary Dr. Nandika Sanath Kumanayake. Speaking at the IRD Staff Officers' Association's 52nd Annual General Meeting in Colombo, Dr. Kumanayake acknowledged widespread concerns among public and private sector employees about Pay-As-You-Earn taxation, noting that many view these deductions as funds that could otherwise support personal and family needs. However, he emphasized that meaningful tax relief would require further strengthening revenue collection through improved tax compliance and an expanded tax base.

Dr. Kumanayake outlined a comprehensive reform agenda focused on institutional modernization and efficiency. He revealed plans to establish a dedicated unit within the Presidential Secretariat to monitor reforms across state revenue-collecting institutions. Digitalization emerged as a priority area, with the Presidential Secretary noting that the IRD has not yet achieved sufficient digital transformation. Enhanced digital systems, he argued, would streamline operations, improve taxpayer convenience, and strengthen collection effectiveness.

The reform process emphasizes collaborative implementation rather than top-down mandates. Dr. Kumanayake stated that action plans have been developed in consultation with trade unions, departmental officials, and senior administrators, allowing changes to be introduced gradually and practically. He stressed the importance of strengthening domestic institutions amid scrutiny from international organizations including the International Monetary Fund and World Bank regarding Sri Lanka's fiscal performance. According to the Presidential Secretary, a more efficient and modern revenue administration would not only strengthen government finances but also enable meaningful tax relief for middle-income earners while positioning Sri Lanka's tax system alongside international best practices.