State denied substantial VAT revenue collected from consumers

20 November 2023 06:58 am - 19 - {{hitsCtrl.values.hits}}

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COLOMBO (Daily Mirror) - In what appears to be a staggering disclosure, the number of VAT (value-added tax) files registered is found to be way below the actual figure denying substantial revenue collected from end consumers of goods and services to the state coffers, an official said.

The Chairman of the Committee on Public Accounts (COPA) State Minister told the Daily Mirror that the difference between the actual number and the registered number could be ‘unbelievable'.

VAT is a consumption tax levied on goods and services ultimately paid by the end consumer. It is often considered a regressive tax because it tends to have a disproportionate impact on lower-income individuals and households.

Mr.Alagiyawanna said only 13,000 files had been registered but the real number could be much higher.

“Even when we dine out,VAT is added to our bills. Yet money collected from us is not transferred to the Treasury in most cases. What a terrible situation!” he said.

The government has decided to increase the VAT rate from 15 percent to 18 percent to meet the revenue target stipulated by the International Monetary Fund (IMF) to get the next tranche of the Extended Fund Facility .

According to the World Bank, Sri Lanka has one of the lowest tax-to-GDP ratios in the world. Sri Lanka’s tax-to-GDP ratio in 2022 was estimated at 7.3 percent.

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Comments - 19

Dee Monday, 20 November 2023 07:13 AM

When most people run two books, and for an ordinary person the vat invoice is of no tax use, how to check if the charged vat is paid to the govt?

Chandana Fernando Monday, 20 November 2023 11:10 AM

We are paying vat as a retailer. But unfortunately we cannot check invoices we receive at the point of purchase if it’s genuine or not. If not genuine we have to pay the amount which we claimed against the invoice. Ramis system is good but they don’t know how to run it

Gune Monday, 20 November 2023 08:02 AM

Why rely on VAT so much? Instead, Government should catch those high spenders and ask where they get the money from and ad if they have an income tax file. In many successful nations around the world, almost everyone has an income tax file number and the first thing everyone does when they get a job is to fill in their income tax file number. SL has so many people spending money left and right and luxury cars etc, but no one pays tax. Why this paradox? No on has the backbone to catch these people as many of them are politicians and corrupt public servants.

Premalal Perera Monday, 20 November 2023 08:06 AM

You tax the hell out if businesses and people and they will device ways to survive. Taxation without responsibility and accountability will never work. What we have right now is Taxation dictated by a foreign entity called the IMF. This is a recipe for disaster.

Sokrates Monday, 20 November 2023 09:23 AM

The IMF does not determine what kind of taxes the state has to collect, but rather the IMF demands that tax revenues must be higher. However, there are unqualified officials in the Ministry of Finance who are unable to develop a fair tax system. Everyone in this country should pay taxes, more or less depending on their income. Without tax payments there can be no infrastructure. Everyone wants to benefit from it but no one wants to pay. But that's not how a democracy works. The UK, for example, has a fair VAT system. Food is tax-free, everything else is subject to 20% VAT. To register all businesses for VAT and income tax, tax officers only need to walk up and down every street and impose harsh penalties and back payments on all shops and companies that have not registered. As simple as that.

Premalal Perera Monday, 20 November 2023 01:12 PM

IMF may not specify what tax to impose but they are very silent on the spending side. It is uncontrolled state spending which decimate an economy. We are a country of 22 million people including the very old, very young but the state sector employees 1.5 million. This is clearly unsustainable. Added to it there are SOEs vast majority of which exist as a gravy train for the politicians and their families. Then comes corruption. When you add up all that no amount of tax will be enough. The economy will collapse.

Sandy Monday, 20 November 2023 08:45 AM

Make online payment mandatory for expensive purchases

Priyanka Priyan Monday, 20 November 2023 08:53 AM

This entire economic policy script is written by IMF. Therefore, government and central bank officials can run the economy this way according to the IMF policy and script even without Ranil and his other politicians. The president, cabinet and the politicians have nothing much to do. So people should make sure to cast their votes wisely in the coming elections to save the country from these corrupt politicians. No other option is available now.

Fact Monday, 20 November 2023 08:59 AM

Compliance should start from the top. Many manufacturing industries don't issue invoices for the trucks leaving their warehouses. Good example is the Steel rolling mills. They benifit from both the tariff protection and corrupt practices.

Jayantha Monday, 20 November 2023 09:17 AM

Tax the people while you guys get free massive monthly fuel quota for luxury vehicles. These guys talk from backside. Future government should recover all free fuel given to these crooks.

Ron hardy Monday, 20 November 2023 09:34 AM

Every government portfolios sector's catogorys got no proper macanisam or system to reconcile monthly qouterly yearly basis is a huge problem for the economy mismanagement corruption bribery comes to play all sectors should have a proper monitoring system to solve many issues that have effected the countries financial system leading to Bankruptcy.....

VJ Monday, 20 November 2023 10:02 AM

How will the government collect the VAT from vendors like those thousands of groceries, meat shops, fish stalls who sell consumables but don’t even give you a receipt. Some larger businesses indicate the VAT separately in their receipts. Are these collected taxes paid to the government? How is it verified? How about super markets? Does the price we pay includes the VAT? 18% of the total sales have to be handed over to the government, is this happening? Unless the government make it mandatory to use an approved cash register and data is made available to the authorities, tax collection will not work. I have seen in Italy, financial police randomly check consumers coming out of a store with merchandise if they posses a receipt for their purchase. The vendor is charged for tax evasion and sometimes the consumer could be charges for stealing since they don’t have a proof for their purchases.

Seqi Monday, 20 November 2023 11:45 AM

So many small businesses are run by and staffed by uneducated people..... even supposedly the well educated find the tax papers undeciferable and so they will seek help from tax consultants......who in turn will enjoy their time in the sun and make hay......

L. Dharmalingam Monday, 20 November 2023 11:47 AM

Recover from the Rajapakshas who bankrupted Sri Lanka.

Anura Hettiarachchi Monday, 20 November 2023 12:25 PM

Same story is said over and over by different persons but solutions

Anura Hettiarachchi Monday, 20 November 2023 12:25 PM

Same story is said over and over by different persons but solutions

Shiran Monday, 20 November 2023 01:22 PM

Let's be serious. It is general knowledge the number of "Income Tax dodgers" are high. Now we are told the VAT Dodgers are also high. The need to widen the Tax net is obvious but the political/ officials will to do this is lacking. IMF must highlight this. Elephant in the room -CORRUPTION

Buddhist Monday, 20 November 2023 05:12 PM

As practiced in most African countries, connect all cash registers to the Income Tax Dept directly. This would enable the tax department to monitor and collect all sales taxes and other taxes.

Sambo Monday, 20 November 2023 07:26 PM

Sri Lanka must be number one in corruption in the entire world. What ever they do has a s candle and corruption behind it. How sad that people have become so selfish.

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State denied substantial VAT revenue collected from consumers

Comments - 19

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