IRD to launch comprehensive tax audit under new chief
Sri Lanka’s Inland Revenue Department (IRD) is to implement a comprehensive tax audit process in a structured and a systematic manner aimed at minimising tax evasion and non compliance.
This is essential since the drawbacks under the prevailing mechanisms have to be attended promptly and audits on ad-hoc basis needs to be avoided.
Commissioner General of Inland Revenue Kalyani Dahanayake
In the recent past, political interference and favouritism have created opportunities for tax evasion and encouraged a culture of non compliance. Auditing can not only detect and penalize evasion attempts but also signal a tax administration’s intention to prioritize more aggressive enforcement.
Large business organisations that represent less than 20 per cent of the corporates contribute 80 per cent of the tax revenue of the country and tax compliance of the SME sector needs to improve for Sri Lanka to achieve higher economic growth and other targets.
Making these comments in an interview with the Business Times on Wednesday, newly-appointed Commissioner General of Inland Revenue Kalyani Dahanayake said that the post tax audit of the department will be further strengthened to crack down on tax evaders as it is essential to maintain the confidence of genuine taxpayers.
She revealed that measures will be taken to automate parts of the process enabling the administration to develop specific audit tools, which will simplify procedures and improve the overall quality and consistency of audits.
The Commissioner General, pointing out the need to increase audits, has said that there are various reasons for defaulting such as financial difficulties and even purposefully avoiding.
In a transition at the helm of the Tax Department under the new regime, Ms. Dahanayake assumed duties on Tuesday as the new Commissioner General of Inland Revenue, replacing acting Commissioner General Ms. R.M.R.W. Manchanayake who was appointed to the post with affect from 01.08.2014 by the previous regime, deviating from the normal administrative procedure of seniority in the department.
Ms. Dahanayake is the most senior tax official in service at present with 33 years experience. She started her career as a tax assessor. She has been with the department since 1981 apart from a short stint at the Finance Ministry and has a Master’s degree in management and several other post-graduate qualifications.
She is the 22nd Inland Revenue commissioner general and the fifth woman to hold the post.
Government fiscal outcomes are affected if taxpayers fail to pay their taxes and the tax administration should achieve a high level of voluntary on time payment, and low incidence of tax areas, she said.
She added that she will strengthen the tax administration and make attitudinal changes of officials and tax agents to apply tax laws with integrity and fairness.
The department is being automated to introduce a new Revenue Management Information System with the assistance of the Asian Development Bank. Ms. Dahanayake said that she will take all necessary steps to simplify the tax regime.
Stressing the need of thinking about the future, she noted that Internet portals, mobile-payment options, and ATMs could be used for simple taxpayer transactions (such as declarations and payments) and such a modern tax administration system can increase the level of voluntary payments while conveying a strong sense of its public obligations.
She pointed out that one of her intentions is to enhance the productivity and professionalism of the staff through proper training and management, work experience, and thereby enabling them to contribute more effectively towards achieving high revenue performance.
She said that she is planning to provide assistance to IRD staff to further their higher education by taking post graduate courses and Master’s degrees through local or foreign universities.