Financial Times

Inland Revenue to go after tax dodgers
The Department of Inland Revenue will re-open investigations and pursue individuals and companies who had tried to evade taxes under the controversial wide-ranging tax amnesty whose repeal has been approved by the Supreme Court and is expected to be passed by parliament with amendments.

"We will proceed with action to recover what is due other than income tax," declared Kandiah Suseelar, Commissioner General of Inland Revenue. Revenue collection is expected to improve with the approval of a number of new bills, including one amending the tax amnesty, that would close loopholes in the law, he told The Sunday Times FT.

The department will get more powers to probe undeclared income with the approval of the new laws. The Supreme Court has approved with some modifications a new bill that confines the controversial tax amnesty given under the Inland Revenue (Special Provisions) Act No 10 of 2003 only to income tax.

The previous tax amnesty granted by the former government extended to indirect taxes like customs and excise duty, GST, defence levy, income tax and exchange control laws.

Suseelar said there had been only 52,000 declarations under the tax amnesty. "Under the previous tax amnesty our officers were not allowed to examine declarations filed by them. The declarations were incomplete. Now we're given the authority to call for further information.

"Some did not give the value of undeclared assets. For example, if they had bought property they did not give the value and only gave the extent of the land they owned." Suseelar said VAT collection was on target and that the department expects to get Rs 115 billion by year-end.

"In the case of corporate income tax, we're a little bit short but with the amendments being brought in (to the tax laws) some loopholes will be rectified. We expect to be able to reach the target if they all pay up."

He expects to collect at least Rs 2 billion from financial institutions who had used a loophole in the law by misinterpreting certain provisions in the regulations to avoid paying tax on interest they received.

A "lot of money" is also expected to be collected with the rectification of an exemption clause on withholding tax on interest received from treasury bills, Suseelar said.

"There are big amounts due from a few companies. They tend to ask for more time to pay. If they comply then there's a good chance of meeting income tax targets."

Collections are also expected to improve with the planned modernisation of the department and the introduction of information technology that would allow it to better monitor income.

The government told parliament last week that around Rs. 38 billion in indirect taxes such as Turnover Tax, Goods and Services Tax, Defence Levy and Stamp Duty were outstanding as at 31.12.2002. The outstanding amount of Income Tax and surcharge on Income Tax was Rs. 30 billion.

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