Sri Lanka's government revenue witnessed a significant 32.2% year-on-year increase in 2024, reaching Rs. 4,080 billion, according to the Central Bank of Sri Lanka (CBSL).

This substantial growth was accompanied by a notable rise in the number of registered income tax payers, which surpassed 1.4 million by the end of the year, up from 879,778 in 2023.

The CBSL's annual economic review highlights that this revenue surge was primarily driven by increased tax collections across various sectors, including income tax, value-added tax (VAT), excise duties, import duties, the special commodity levy (SCL), and the social security contribution levy (SSCL).

Consequently, tax revenue as a percentage of GDP rose to 13.5% in 2024.

Specifically, income tax collection saw a 12.6% increase (Rs. 114.8 billion) compared to 2023, while VAT revenue experienced a remarkable 88.6% growth (Rs. 615.2 billion) over the same period. The CESS revenue also showed a significant 41.9% year-on-year increase, attributed to higher import volumes and upward revisions in CESS rates on selected imported goods.

However, revenue from the Ports and Airport Development Levy (PAL) recorded a slight 3.1% decline, a consequence of the government's policy decision in 2023 to phase out PAL over five years to streamline para tariffs.

Despite falling slightly short of the National Budget 2024 revenue estimate by 3% (Rs. 115 billion), the CBSL noted that the central government's tax revenue exceeded the target set under the International Monetary Fund's Extended Fund Facility (IMF-EFF) programme by Rs. 120 billion.

The significant expansion of the taxpayer base, with over 600,000 new income tax registrations in 2024, underscores the positive developments in revenue collection during the year.