A firm mechanism should be put in place to curb the loss of revenue to the state due to the continuous use of various tactics by some importers who commit ‘large scale tax frauds’ by presenting under-valued invoices when importing goods, the Auditor General said in his report.
According to the report presented recently, illegal imports of goods, non-declaration and under declared items imported are on the rise. The Auditor General also said the methodology adopted by the Customs for the sale of confiscated items was riddled with deficiencies. He said though a revenue of Rs.276 million had been earned through such sales and Rs.393 million in 2010, the actual amounts should have been different.
“Those sales had not made the maximum contribution to the state revenue. Therefore, there is a need for the implementation of a formal sales procedure in accordance with the Procurement Guidelines of the Government,” he said.
Special investigations on state revenue management carried out by the Auditor General Department had found that the country’s revenue collection mechanism was plagued with weak, ineffective, erroneous and inefficient features.
The Department of Inland Revenue, the Sri Lanka Customs, the Department of Motor Traffic and the Department of Excise are the major revenue collection institutions in the country. During the year under review, motor vehicles had been registered by producing altered custom clearance documents, the report said.
The Auditor General said the department had failed to take action against those who produced such false documents.
The government had forgone Rs.28 billion by way of tax revenue during the past two years due to various rebates given on imports as an incentive for exporters of such items and concessions under different trade agreements, the Auditor General said in his report.
The report that was released last week, said Rs.12 billon was lost in 2009 and Rs.16 billion in 2010. The total amount lost in 2010 accounted for 2.1 per cent of the country’s total revenue. (Kelum Bandara)