Tax Compliance
Nation building perspective
Corporate responsibility is often discussed in terms of environmental, social and governance (ESG) commitments but tax compliance remains one of its most practical and measurable expressions.
“Corporate tax links business success to social and national development. If you think of it simply, corporate tax is a company’s financial contribution to the country’s public cost based on its earnings,” Anoji De Silva explains.
Tax compliance demonstrates a company’s commitment to fairness, accountability and sustainable economic systems, she adds: “It should not be viewed as only a legal obligation but a social responsibility of a corporate to contribute to the sustainable development of the country.”
Corporate tax is a key source of public revenue, helping fund infrastructure, healthcare and education systems, which in turn support both society and business. However, as De Silva notes, Sri Lanka’s corporate tax collections remain relatively low compared with regional peers despite a standard corporate tax rate of 30 percent. This raises important questions about concessions, compliance and public confidence in how tax revenue is used.
“It may be good for the government to identify the reasons why our collections are lower than our peers. Is it due to too many concessions being offered to businesses, corporates not paying what is due or resistance to paying taxes because utilisation of tax monies by the government isn’t transparent?” she asks.
The link between tax compliance and business sustainability is also important.
Corporates rely on public services to operate and grow. Poor infrastructure can affect logistics and expansion, weak education systems can reduce the availability of skilled workers, and the absence of accessible healthcare can increase employment costs.
“Taxes contribute to funding our infrastructure, healthcare and education. Businesses too depend on these services. The lack of proper infrastructure will have a direct impact on the growth of a business. A poor education system will result in not producing the required skilled staff, which is also vital for a business to succeed,” De
Silva notes.
On the other hand, companies that fail to pay their due taxes shift the burden onto others.
“A company that fails to comply with paying the due taxes puts the onus on another company to pay more, which is not sustainable in the longer term. This will result in short-term gains at the cost of long-term success, and sustainability of a business and our economy,” she cautions.
De Silva continues: “Responsible tax behaviour is a key driver of trust capital – it is essential for brand strength, investor confidence and long-term sustainability. It strengthens public trust by showing that a company is fair in sharing the social responsibility of paying its dues and funding the public cost.”
This trust extends across customers, regulators, investors and the general public.
Tax compliance also shapes perceptions of corporate citizenship. As De Silva states, “corporate citizenship refers to how a company conducts itself as a member of society. Tax compliance is one of the clearest and most measurable indicators of this.”
Conversely, tax evasion can damage reputation, making a company appear exploitative or disconnected from social welfare. In today’s ESG landscape, tax behaviour is increasingly viewed as part of both the social and governance pillars. Respect therefore, becomes difficult to claim when tax obligations are wilfully ignored.
De Silva underscores that “respect is built on integrity, accountability and ethical behaviour. It will be difficult for organisations to claim genuine respect if they wilfully evade meeting their tax obligations.”
Tax compliance reinforces a company’s contribution to national development. By meeting their obligations, businesses support investment in education, healthcare, roads, ports and other vital infrastructure.
She sums up: “In essence, compliant organisations act as partners in nation building, reinforcing both economic progress and social wellbeing.”
