Making better use of available information to enforce tax laws

Thursday, 16 July 2026 01:20 - - {{hitsCtrl.values.hits}}

The Commission to Investigate Allegations of Bribery or Corruption (CIABOC) is presently investigating a number of cases involving persons alleged to have accumulated substantial wealth through unlawful means. Such investigations are necessarily complex and may take several years before criminal proceedings are concluded.

However, there is another avenue that deserves attention. During the course of its investigations, CIABOC would invariably obtain information relating to assets, bank accounts and other financial transactions. Such information could be shared with the Inland Revenue Department (IRD) to enable it to examine whether the income used to acquire those assets has been properly declared for income tax purposes.

If the IRD finds that taxable income has not been disclosed, it has independent statutory powers to raise additional assessments and recover the taxes due. In appropriate cases involving fraud, wilful default or tax evasion, the ordinary statutory time limits for raising assessments may not apply.

The tax liability of a person is separate from any criminal liability under the anti-corruption laws. Accordingly, the IRD need not necessarily await the conclusion of lengthy corruption investigations before examining whether there has been a failure to disclose taxable income.

Any action taken by the Inland Revenue Department to assess and recover taxes on undisclosed income may also support and reinforce investigations being conducted by CIABOC. While a tax assessment is not, by itself, proof of corruption, evidence of undeclared income or unexplained wealth may be relevant to both tax enforcement and anti-corruption proceedings.

The IRD should also make greater use of information already available in the public domain. A recent news report disclosed that Sri Lanka Cricket had incurred legal fees and related expenditure amounting to approximately Rs. 681 million over a three-year period. Where such substantial payments to identified recipients are disclosed, should the IRD not routinely verify whether the income received has been properly declared and the taxes due have been paid?

This is not to suggest wrongdoing by any recipient. It is simply a question of effective tax administration. Information regarding substantial payments is increasingly available through audit reports, court proceedings, parliamentary inquiries, regulatory investigations and the media. The IRD should have an effective mechanism to examine such information and cross-check it against tax returns already in its possession.

The public therefore has a legitimate question: are our revenue authorities making full use of the vast amount of financial information already available to them?

Greater coordination between CIABOC and the IRD, together with systematic use of credible publicly available information, could not only improve revenue collection but also strengthen the enforcement of the country's laws.

A Concerned Citizen

Moratuwa