VAT void

Tuesday, 22 February 2011 00:12 - - {{hitsCtrl.values.hits}}

By Uditha Jayasinghe

Around 6,000 VAT claims totalling billions could be cancelled by the end of this month as the Inland Revenue Department (IRD) looks to complete an 18,000 VAT backlog that has been delayed by over a year.

In November 2009 the IRD outlined plans to clear a backlog of 18,000 VAT claims, some of which have been stagnating for as many as four years. However, the scheme soon ran into red tape with the elaborate checking process that was implemented by the IRD after the famous VAT scam several years ago.

Fourteen months later the IRD has made 6,000 cancellations and cleared a total of 12,000 claims in total by 1 December 2010; this leaves 6,000 more to be processed. In the meantime, IRD officials have processed 11,300 regular claims and made Rs. 8.7 billion worth of payments. In January 2011 the amount stood at Rs. 600 million from 500 claims.

IRD Deputy Commissioner General (Indirect Tax) Mallika Samarasekera told Daily FT that three stumbling blocks existed for the backlogged payments with exporters whose numbers do not tally, with Customs records having to re-file their claims.

Currently there are over 2,700 such applications totalling Rs. 1.2 billion with the IRD and they were to be processed before 31 December 2010. However, this deadline has been extended yet again till the end of February.

“I have given them till the end of February to present us with accurate figures because otherwise we cannot pay them. There are oversights that must be addressed by the companies and we are extra careful after the VAT fraud. Despite a second round of advertisements, less than 300 claims have been responded to. Any claims that have not received a response will be cancelled at the end of this month.”

Samarasekera explained that the company numbers had to be crosschecked with the Textile Quarter Board statistics as well and that 1,450 applications totalling Rs. 560 million were delayed as a result. Over 3,800 that fall into the ‘no response’ category are still languishing as the IRD tries to contact the companies that filed the claims – some years ago.

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