New buildings for Customs, IR

The Customs and the Inland Revenue Department, in a shift in policy from the former UNP government’s plan to have all state revenue agencies under one roof, are putting up their own headquarters.The Excise Department is, in the meantime, renovating and expanding its city office as the new headquarters.

"We have been given the go ahead for a new 14-storey building (near the Colombo Port Main Street entrance)," C.S.W. Jayatilake, Customs Director General told The Sunday Times FT.

"We are nine months into the pile-driving process,” he said. The Department is hoping to float tenders for the construction of the building by the end of 2006. The estimated cost is Rs.3 billion with completion expected in approximately three years. "The Inland Revenue is doing the same programme on its own. About half of their restructuring has been completed."

Inland Revenue is putting up a new building on the former Sathosa site at Jawatte road. Construction is going on.

Some years ago during the UNP regime under Chandrika Kumaratunga’s presidency, a Revenue Authority was to be set up with Customs, Inland Revenue and Excise coming under it but that proposal was reversed after the government changed hands. However President Mahinda Rajapaksa’s administration has agreed to requests from multilateral agencies to have more coordination between the three revenue agencies.

Under the current Financial Management Reform Programme (FMRP) the three departments will be led by separate heads. The FMRP involves the reform and modernization of the financial management area such as the treasury, budget and fiscal policy but is being done individually. "These three revenue departments are on three different levels," Jayatilake said. He said Customs is on another level with the appointment of a human resource committee represented by all the unions, in discussion on how the department should be positioned, performance evaluation schemes and salary structure. The committee is at the tail end of its work.

“We are about to launch this programme by the end of the year whereas the Inland Revenue has already launched this programme."

PricewaterhouseCoopers is assisting the Customs Department with human resource consultants for preparation and evaluation of the work plans under an ADB loan agreement. Jayatilake said the Department has collected Rs.169 billion in revenue up to September 2006 and the Customs chief believes they are well on their way to achieving the Rs.200 billion targeted for the year.

A staggering Rs. 30 billion in revenue comes to the Customs from cigarettes. Ironically, Jayatilake notes that despite action being taken to curb the sale of cigarettes, production has been going up.

"Our actions are against this but our targets are going up," he said. "With the no smoking bans and bans on advertising, we continue to collect more revenue from cigarettes.

Unfortunately, it is bad for health but good for taxes."

Asked about ongoing probes, Jayatillake said the investigation into GoldQuest for allegedly defrauding the Customs out of millions of rupees in tax revenue is still in the Appeal Court relating to a case filed by Customs.

The investigation into the scandal surrounding liquor imports by Periceyl (Pvt) Ltd, a jointly controlled entity of the Distilleries Consortium of Sri Lanka (DCSL), is ongoing. “We are going into past records," he said. The Sunday Times FT has reported the Customs investigation where the Harry Jayawardene-led company allegedly imported 135,000 litres of alcohol -- brandy, gin and whisky -- which was undervalued at a lower rate of duty. Last year alone, it is estimated that the company has not paid Rs.150 million in duty.

In recent times there have been several complaints from local car dealers on imports. They allege that due to the improper actions of Customs officials and certain car dealers, a dangerous trend is on the rise and is affecting vehicle owners in Sri Lanka. Dealers falsify customs documents in order to pay lower duty or ascertain discounts, putting legitimate dealers at a disadvantage when vehicles imported fraudulently are sold at a much lower price.

Some industry sources said several cases of this nature have been reported where car traders are operating in an unprofessional manner, leading to customs manipulation which eventually ends up severely affecting unsuspecting vehicle owners who purchase automobiles from these dealerships.

"It is a problem," agrees Jayatilake, when asked for his comments on this issue. "But this is done in conjunction with wharf agents and dealers, not only customs officials.”He said action is being taken against those not declaring accessories which are imported such as televisions or multiple CD players. However, it is impossible to examine all motor vehicles coming into the country.

“We depend on random checks or declarations submitted to us by the wharf agents who do the paperwork. Invariably, we know the standard fittings of certain cars. We also conduct post audits which have highlighted some of these issues," he said.

There are shipments which come into the country containing disassembled car parts. One BOI approved company which brings in these disassembled parts from Japan is Vehicle Lanka. "The company is experiencing some difficulties," he said. "Now they are in courts regarding those disputes."

Jayatilake said the Customs Department is hoping that by improving their computer links and examination of post audits, the problem of illegal imports of vehicles can be alleviated. The Department has recently uncovered cases with the collusion of customs officials and hopes this will be a deterrent to others who wish to engage in such activity in the future. (NG)