ECONOMYNEXT \u2013 Sri Lanka\u2019s Inland Revenue Department (IRD) and the Excise Department (ED) entered into an agreement to share intelligence information\u00a0aimed at preventing tax evasion and money laundering, the Finance Ministry said on Wednesday.<\/p>\n
The Memorandum of Understanding (MoU)\u00a0 will see a joint mechanism and conducting parallel investigations over the information they share.<\/p>\n
\u201cIn parallel with Sri Lanka\u2019s third mutual evaluation against money laundering, terrorist financing, and proliferation financing, offenses relating to tax evasion.. and offenses falling under the Excise Ordinance have been designated as \u2018Unlawful Activities\u2019 related to money laundering with effect from August 4, 2026, via the Prevention of Money Laundering (Amendment) Act,\u201d the Finance Ministry said in a statement.<\/p>\n
It said the new MoU will establish a mechanism to act collectively against such offenses by optimizing state resources.<\/p>\n
Through this initiative, the government expects to achieve its revenue targets by expanding audits against tax evasion, minimizing illicit financial flows, and streamlining revenue collection, the Ministry said.<\/p>\n
Historically, institutional silos and a severe lack of inter-agency data integration between the IRD and the ED created systemic loopholes that enabled widespread revenue leakage.<\/p>\n
Operating as isolated entities with incompatible record-keeping systems, the two revenue-collecting bodies could not cross-verify transactional, production, and tax filings in real time.<\/p>\n
This operational disconnect allowed non-compliant businesses and manufacturers to report low turnover figures to the IRD for direct tax assessments while simultaneously under reporting production volumes or duty liabilities to the Excise Department.<\/p>\n
The absence of automated intelligence sharing restricted the state\u2019s capacity to conduct parallel financial audits and limited visibility over illicit financial flows, tax evasion schemes, and black-market trade in excisable goods, analysts say.<\/p>\n
Consequently, they say, uncoordinated oversight severely weakened tax compliance enforcement, eroding the government\u2019s tax-to-GDP ratio and hindering the optimal realization of national revenue targets. (Colombo\/October 21\/2026)<\/p>","protected":false},"excerpt":{"rendered":"
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