Tax defaulting manufacturers face liquor licence cancellations
The Excise Department is to cancel liquor licences of manufacturers and dealers automatically when their tax payments are in default. Tax amount in default of the department as at 30.06.2023 is approximately Rs. 6235.9 million, a senior Finance Ministry official said.
Excise tax on alcohol and cigarettes has for long been a cornerstone of state revenue, but the Treasury is now incurring colossal losses due to increase in tax evasion at a time income has become an urgent need.
The department will introduce and implement a proper mechanism to monitor 5000 liquor permit holders and 23 registered distilleries.
It will expedite the development of an IT application linking of 23 distilleries and introduce automatic taxation system immediately after the completion of the liquor production process.
The government is losing tax revenue of Rs.60 billion annually as a result of irregularities,
malpractices and inefficiency of the department, a National Economic and Physical Planning, sectorial committee report revealed.
The department has collected Rs.109 billion during the first eight months of this year missing the target of Rs.217 billion so far in 2023.
The annual production of liquor manufacturers is in the region of 540-600 million bottles per year but 40 per cent of it is entering the market via the undercover route to evade taxes despite the introduction of security sticker system in 2018.
The department has been able to seize over 40,000 liquor bottles in the local market during its official raids but at present it has no proper system to detect fake stickers, a senior official of the department said.
Four liquor companies including Distilleries Company of Sri Lanka (DCSL), Lion Brewery Ceylon PLC, Mawathagama Heineken Lanka Limited and a subsidy of DCSL use digital image print whilst all other companies use a security tax stamp in the liquor bottles as per a decision taken by the Cabinet of Ministers in 2021.
DCSL and other three companies claim that it is difficult to use the security tax stamp in the liquor bottles due to the large volume manufactured by them.
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