The current tax administration of the VAT refund branch of the Inland Revenue Department (IRD) is constrained by limited automation, lack of staff skills due to insufficient specialised training, heavy paper work and checking of documents, exporters seeking VAT refunds complained at a seminar on VAT refunds in Colombo on Tuesday.
Several forms have to be filled burdening the tax payer, when this information could have been very easily obtained from the database had it been up to date and more user-friendly to the units’ officers. There is also some evidence suggesting a severe lack of data entry staff to support revenue officers, they said. The seminar was organized by Exporters Association of Sri Lanka in collaboration with the Ceylon Chamber of Commerce, to create greater awareness and educate the export community on the modalities of applying for VAT refunds and the various aspects involved in processing same, in order that VAT refunds may be obtained within a reasonable period of time.
Responding to these complaints, Ms Mallika Samarasekara Deputy Commissioner General of the IRD said that functions of the VAT refund branch have now been streamlined to make normal and bank guarantee scheme refunds within 45 days and 15 days, respectively. She said that in some instances senior officials of the department including herself had intervened to settle problems in VAT refunds promptly. She added that exporters should coordinate with Customs when presenting export figures to the IRD for VAT refunds. The discrepancies in export data, between exporters and the Customs Department, are a major cause of delayed refunds. She said that there is no delay in refunding the current claims except the clearing of the backlog as the department has received sufficient money from the Treasury for this purpose.
Ms B.D.D.Herath, Deputy Commissioner (VAT Refunds) told the gathering of around 70 exporters involved in applying for VAT refunds, as well as those having long outstanding refunds, that under the 15-day refund scheme , the exporters, should produce a bank guarantee for the refund amount, tax clearance certificate, input schedule on imports, local purchases and other documents. She said the reason for not releasing refunds within 45 days may be that export data doesn’t tally with the computer system of the IRD, doesn’t tally with imports, and the delay in submitting confirmation on the suspended VAT supplies.
The IRD cannot refund claims if there is a major difference between the data submitted by exporters and the Customs department. It is essential to update data at Customs because the IRD uses this data to verify the claims of exporters, she said.
However she noted that the delay in refunding VAT refund arrears running into billions of rupees is unavoidable, as the department officers have to go through all documents carefully. On the other hand they have to handle refunds of over 24,000 VAT payees annually.
Some companies complained that they have not received VAT refunds for a period of over four years commencing from as far back as 2004. Large exporters have claimed VAT refund overdues ranging from Rs 500 million to Rs 900 million. However, the majority of small and medium exporters with less than Rs 100 million in dues, are the most badly affected by the delay. Deputy Commissioner General, Ms Samarasekara requested most of them to meet her or senior officials to settle their problems promptly. |
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