The Inland Revenue Department (IRD) has published a comprehensive report detailing outstanding tax amounts as of December 31, 2023, shedding light on the current tax arrears landscape.
According to the report, the total tax arrears amount to 1,066 billion rupees. Of this total, 878 billion rupees are currently on hold due to pending tax appeals, leaving the IRD with an anticipated recoverable amount of 188 billion rupees.
From January 1 to June 30, 2024, the IRD successfully collected 47 billion rupees in tax arrears through various measures, including the seizure of bank accounts from 900 taxpayers, installment payment plans, and other legal actions. Additionally, 57 billion rupees were recovered or reduced through settled refunds and objections, resulting in a total reduction of 104 billion rupees in tax arrears for the first half of 2024.
As of December 31, 2023, 84 billion rupees of the anticipated 188 billion rupees remain to be collected.
Under the IRD’s self-assessment system, taxpayers must submit their Tax Returns and pay the corresponding taxes. Failure to pay results in tax arrears. The department may issue additional or estimated assessments if reports are not accepted or Returns are not filed. Taxpayers can appeal these assessments within one month, with unresolved cases potentially escalating to the Tax Appeals Commission, and further to the Court of Appeal and the Supreme Court if necessary. During the appeal process, the IRD is unable to collect taxes until a final decision is reached.
The IRD noted that completely eliminating tax arrears is challenging due to the continual issuance of new assessments. The department remains focused on maintaining effective tax arrears collection processes within the existing legal framework, as evidenced by their efforts to reduce tax arrears by 104 billion rupees in 2024.
