Abstract:
COVID-19 has triggered a severe economic collapse in Sri Lanka. Tax revenue has declined steeply,
with businesses closed and operating at reduced hours. The rapid decline of the economy and
uncertainty about the future revenue generation and foreign aids persuade tax policymakers to take
immediate action and explore potential avenues that will support in dealing with the crisis. However,
it is essential to consider the taxpayers' ability to contribute to revenue generation in a pandemic
situation rather than implementing unbearable strategies abruptly. This research aimed to analyze
different tax players' perceptions of the possible approaches to increase tax revenue during the
pandemic. The study uses a qualitative method by collecting data through in-depth interviews with
thirty-five taxpayers. The sample for the analysis was selected from the small and medium taxpayers
who do business in the Colombo district in Sri Lanka. Focused Group Discussions were conducted to
collect data from people playing various roles in the tax field. The results found possible actions to
reduce the tax burden on people and increase tax compliance. Besides, the researchers attempted to
uncover perspectives of the different actors in the tax field, which will give some insight into what
the taxpayers expect in a pandemic situation. The study suggests that granting additional time for
taxpayers to attend tax matters due to lockdown, allowing to re-schedule default tax payment plans,
approving extensions to pay current taxes, and speeding up the process of refunds are required as
urgent interventions in the tax field. Also, the study found that making available more online tax
services will support reducing non-compliance. Easy access to new tax file openings, penalty
concessions, audit policy changes, and introduce more benefits for the taxpaying community will
keep the tax compliance level uninterrupted. The study highlights the requirement of policy changes
and the revisions to tax administration during COVID-19 in Sri Lanka.
Keywords: COVID-19; Focused Group Discussion; Revenue; SME Taxpayers; Tax Compliance
