Oct 25, 2012 (LBO) – Taxes collected by Sri Lanka’s internal revenue office rose 8 percent to 369 billion rupees up to September 2012, from a year earlier commissioner general Mallika Samarasekera said. With a so-called simplified VAT (SVAT) system coming into effect, refunds made to exporters had fallen she said.
Sri Lanka’s value added tax system had been badly undermined with exemptions being given to multiple special interest groups close to rulers and multiple rates being used instead of a flat transparent single rate like 20 percent used in more transparent countries.
When VAT was first introduced, a deceptively low 12.5 percent rate was used when the revenue neutral rate (to get the same tax volume from the previous turnover tax regime) was widely known to be 17.5 percent.
The deceptive rate was then followed up by slamming a series taxes with no input credit under various labels on citizens.
In another deceptive move, a regime that came to power in 2001 stopped VAT being shown in invoices received by ordinary citizens. The agency had been given a target of 512 billion rupees for 2012 and the by the end of the third quarter 72 percent of the target had been met by the end of th