Peace for the World

Peace for the World
First democratic leader of Justice the Godfather of the Sri Lankan Tamil Struggle: Honourable Samuel James Veluppillai Chelvanayakam

Monday, April 24, 2017

Lanka’s steel traders in massive tax fraud

Lanka’s steel traders in massive tax fraud

Apr 24, 2017

Nearly Rs. 5,000 million (Rs. five billion) of tax income is reportedly lost to the state due to a massive fraud in the local steel industry. Reliable sources say the manufacturers do not pay the Nation Building Tax and the Value Added Tax, but the relevant authorities ignore complaints due to the various gratifications they are receiving from the manufacturers.

The fraud relates mainly to reinforcing bars, whose monthly sale is around 45,000 metric tons. According information we have, for each ton sold, a two per cent NBT and a 15 pc VAT have to be paid, but the sellers mention a mere 30 pc of the actual sales in their documentations.
 
The actual sales translate into a required tax payment of more than Rs. 550 per month, but only nearly Rs. 250 m is paid, causing an annual loss of close to Rs. 3.6 billion. In addition, sales figures of steel cage and L-angles etc. too, are manipulated to deny nearly Rs. 120 million of taxes. Furthermore, the income tax is calculated according to the manipulated figures, and in all more than Rs. five billion of tax money is lost to the state.
 
Our investigation also revealed that the manufacturers also use substandard raw materials, with reinforcing bars being produced mainly using locally available steel, not the imported steel as required. For the removal of colluviums in the steel, they use machinery powered by sludge, not the costly electricity-powered ones.
 
Sathhanda