Sri Lanka’s Revenue Administration Management Information System (RAMIS), a Rs.10 billion digital tax platform launched in 2016, is underperforming and exposed to serious risk, according to the World Bank’s Public Finance Review – Towards a Balanced Fiscal Adjustment. As the country attempts to rebuild fiscal credibility post-crisis, RAMIS stands at a crossroads: either evolve into a robust digital backbone for tax administration or risk becoming a costly failure.
Why RAMIS Matters
RAMIS was designed to automate taxpayer services, enable risk-based audits, and reduce leakages in a system handling trillions of rupees in revenue. Instead, core functions; taxpayer portals, automated data analytics, risk management, and taxpayer validation remain incomplete, forcing manual workarounds that are costly and error-prone.
The platform was envisioned as a transformative leap for the Inland Revenue Department (IRD), replacing outdated paper-based systems with digital workflows. In theory, RAMIS would allow taxpayers to file returns online, receive automated notifications, and undergo audits based on data-driven risk profiles. In practice, however, many of these features remain underdeveloped or non-functional. Tax officers still rely on manual spreadsheets, and businesses often face delays and inconsistencies in assessments and refunds.
This gap between ambition and execution has real consequences. Tax compliance becomes more burdensome, enforcement less predictable, and leakages harder to detect. For a country trying to expand its revenue base without raising rates, system efficiency is not a luxury, it’s a necessity.
World Bank Findings
- IT governance gaps: No comprehensive framework such as COBIT or ISO/IEC 38500.
- Vendor oversight weaknesses: Heavy dependence on the Singaporean developer, with no robust transition plan as support contracts near expiry.
- Human resource shortages: An understaffed IT team lacks the skills to run RAMIS independently.
Read the article on “Tax Digitisation in Sri Lanka: Progress or Pitfall?“
The 2027 Transition Challenge
The IRD plans to assume full control of RAMIS by 2027. Without strong governance and skilled staff, a vendor exit could disrupt revenue flows of roughly USD 6.6 billion annually. That’s nearly a quarter of Sri Lanka’s total government revenue.
The transition is more than a handover, it’s a test of institutional maturity. Can the IRD build the internal capacity to manage a complex digital system? Can it ensure continuity of service while upgrading outdated modules and integrating new ones? Can it protect taxpayer data and ensure cybersecurity in a volatile global environment?
If these questions remain unanswered, the 2027 deadline could become a fiscal cliff.
Efficiency vs. Risk
IRD’s cost of collection fell from Rs.0.86 to Rs.0.41 per Rs.100 collected between 2020 and 2023 better than the global norm of Rs.1. Yet the World Bank warns that sustaining revenue growth demands major investment; international experience shows returns of up to forty-fold.
Required Reforms
- Recruit and retain IT professionals: Offer competitive incentives, career development, and training to build a skilled internal team capable of managing RAMIS independently.
- Build an internal data warehouse: Centralise taxpayer data, integrate third-party sources (banks, customs, utilities), and enable real-time analytics for audits and compliance.
- Establish a high-level steering committee: Bring together IRD, Ministry of Finance, and external experts to oversee RAMIS upgrades, vendor transitions, and performance benchmarks.
- Shift to risk-based audits and refunds: Replace discretionary processes with algorithm-driven assessments that reduce bias and improve efficiency.
- Pass a modern Tax Administration and Procedures Law: Codify digital processes, protect
Implications for Business and Policy
For investors and businesses, an unreliable tax platform means uncertainty in compliance and policy. For government, it threatens fiscal stability just as post-crisis recovery gains momentum.
Check the news about “Sri Lanka’s New Direction: Government Steps Back from Running Businesses“
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