News
 

Computed tax loss – staggering Rs. 389 b

The computable value of the loss in government tax revenue and non collection of taxes in the past four years amounts to a staggering Rs. 389 billion, excluding the amount that could not be computed accurately, the Auditor General’s Department has revealed.

This exposure was made in a report submitted to parliament by the Auditor General and he called on parliament and the President to take effective and urgent action to arrest this situation.

Outgoing Auditor General S.C. Mayadunne said he could not insist that all this money was lost due to fraudulent activities. “If we try to identify which percentage could be categorised under fraudulent activities, which is due to negligence or due to some other reason, it will take time and resources. But I can say very strongly and definitely that a reasonable part of this money is lost due to frauds and deliberate and intentional activities,” he said.

Among the large scale losses in revenue, the Value Added Tax (VAT) refund fraud case amounting to Rs 3.6 billion was also highlighted in the Auditor General’s report. Mr. Mayadunne said that often the data base provided by various government institutions was unreliable, unrealistic and inaccurate.

Giving some instances, he said a difference of Rs. 16.2 billion was noted between the individual revenue accounts of the Department of Inland Revenue and the Treasury computer printouts while in another instance there was a questionable discrepancy of Rs. 4.1 million between the data of the Customs Department and the data of the Inland Revenue Department.

A test check by the AG’s Department in the collection of arrears of taxes amounting to Rs. 22.3 billion showed that 93 institutions had evaded paying this massive amount to the state by May, 2006.

It was also noted that in 2003, 2004 and 2005, Rs. 47.5 billion had been written off as taxes but during the same period the total collection of arrears of tax amounted to only Rs. 14.6 billion.

It was also observed that the Department of Inland Revenue had made large scale refunds of taxes to certain individuals/institutions from whom large amounts were due as taxes or who had evaded payment of taxes.

One such example was the refund of the National Security Levy (NSL) amounting to Rs. 211.1 million to seven institutions which had evaded the payment of sundry taxes amounting Rs. 705.7 million including an NSL of Rs. 97.8 million during the period 1994-2005.

Top  Back to Top   Back To News Back to News

Copyright © 2006 Wijeya Newspapers Ltd. All rights reserved.