The Commissioner General of Inland Revenue H.M.C Bandara recently revealed in Parliament that billions of rupees in tax arrears for many years could not be recovered due to the lengthy judicial process and delays in the courts.
It was also revealed at the committee that the tax evaders are taking advantage of delays in the judicial process to delay their payments. This was revealed at a recent meeting of Committee on Public Accounts (COPA) chaired by Prof. Tissa Vitarana.
The committee emphasized the need to expedite the court process to recover the arrears and prevent such delays. The committee further said that the Ministry of Justice, the Ministry of Finance and the Inland Revenue Department will be summoned soon to discuss the matter.
The COPA chairman Prof. Tissa Vitarana, further stated that the tax system should be streamlined and all necessary steps should be taken to change the law if necessary.
He said so at the COPA meeting held to review the progress of tax and penalty collection.
It was revealed at this meeting that the tax files pertaining to the tax period up to 31st December 2015 are under the control of the ‘’Legacy’’ computer system and from 01st January 2016 under the ‘’RAMIS’’ computer system.
The Committee pointed out that according to the report, the amount of tax that can be recovered by these systems is not the actual amount of tax that can be recovered. Therefore, the Committee informed the Inland Revenue Department that this should be resolved as there is an issue with the accuracy of the list prepared as arrears tax payers.
The Committee directed that a report be submitted by 31.03.2021 showing the leading institutions among the tax non-payers and their tax arrears.
The Committee also directed the Inland Revenue Department to expedite the recovery of arrears of taxes and fines as only Rs. 224 million has been recovered out of the Rs. 107 billion tax due under the Legacy computer system.
The Committee also pointed out the importance of merging institutions including the Department of Motor Traffic, Land Registry Office with the Department of Inland Revenue for the tax collection process. The Inland Revenue Department stated that 29 such institutions have been identified thus far and the COPA Chairman Prof. Tissa Vitarana said that the Inland Revenue Department and other agencies will be re-convened to discuss the matter.
State Minister Lasantha Alagiyawanna, Members of Parliament Tissa Attanayake, Niroshan Perera, Mohamed Muzammil, S. Sridharan, Dr. Upul Galappaththi, B.Y.G Ratnasekera, Weerasumana Weerasinghe along with a group of government officials were present at the meeting.