A Qualitative Diagnosis of Factors Influencing Presumptive Tax Collection in Sri Lanka

This study aims to explore the factors influencing presumptive tax collection in Sri Lanka. Sri Lanka has a tax to GDP percentage of 7.8% in 2024. Tax revenue increase can be aimed via formal and informal tax collections. Various research identified the mechanisms of improving formal tax collections However hardly any research is done on informal tax collections in Sri Lanka. The researcher identified the gap and analyzed the important factors in this research. An interpretivist paradigm was adopted in this study using a qualitative research approach. Primary data were collected through virtual (On-line) in-depth interviews with 15 participants among tax consultants from the Department of Inland Revenue, tax practitioners, academics and General public in Sri Lanka. Qualitative data were analyzed using thematic analysis. The results of the qualitative analysis of the factors influencing presumptive tax collection in Sri Lanka show the institutional, legal and regulatory framework as well as the governance and political factors, which will help the Department of Inland Revenue and policy makers, formulate policy strategies to promote presumptive tax collection and voluntary tax compliance in Sri Lanka. The research study finds that the government of Sri Lanka improve tax revenue via presumptive taxes of informal activities which has not been considered in the past.