News
IRD cracks down on business entities charging illegal VAT
View(s):- Officials seek police assistance to raid Colombo company, seize documents and computers
By S. Rubatheesan
“It is mandatory for VAT-registered business entities to visibly display their VAT registration number when they engage in business transactions. If anyone is affected by such unlawful practices, they can complain to the IRD Commissioner General directly. Many have complained, and we have acted on them,” a senior Deputy Commissioner General said.
Acting on a complaint from a customer alleging that a particular organisation had charged VAT despite not being a registered VAT-paying entity, IRD officials raided the business entity in Colombo city on Wednesday and took documents and computers into custody for further investigations. The IRD officials had to seek police assistance to enter the premises of this business entity after they were initially barred by the management.
“Our officials were not allowed to enter the premises, so we had to request help from the police. In the presence of the police officers, IRD officers had to open the lock and enter the premises,” the senior IRD official said.
In addition to materials seized from this entity, a separate audit inquiry had also been launched by the IRD to determine whether this entity, which is part of a group of companies, maintained VAT files and whether relevant taxes were paid, the official said.
“Once we receive complaints, we analyse whether the entity or the individual is VAT liable with an annual turnover threshold of Rs 80 million and whether relevant taxes are paid periodically,” the official said, explaining the process.
“If the entity or the individual is found to be non-VAT registered, we can initiate legal action along with penalties. In addition to that, the department can also launch an assessment to recover the funds levied by the entity,” the official said.
Any person who believes he was wrongfully charged with VAT by a non-VAT-registered entity can send relevant details, including the name, address, and documentary proof of the transaction, to the IRD Commissioner General to take action against such individuals or institutions.
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