INSUBCONTINENT EXCLUSIVE:
The Committee on Public Finance (COPF) has expressed its deep dissatisfaction with the Finance Ministry and the Inland Revenue Department
(IRD) over the failure to collect foregone taxes from major corporations implicated in the Sugar scam, as outlined in the forensic report
compiled by the Auditor General.A meeting of COPF was convened under the chairmanship of Dr
Harsha de Silva, during which the committee members underscored its disappointment with the lack of action taken by the authorities despite
a 99.5% reduction in the Special Commodity Levy on sugar imports, as stipulated on Extraordinary Gazette dated October 13, 2020.The COPF
emphasized that no accountability measures have been implemented, allowing certain large corporations to unfairly benefit from the reduced
tax rate at the expense of consumers.Specifically, the COPF inquired about the extent of tax collection from the implicated companies and
directed the Inland Revenue Department to submit a comprehensive report within one week
The COPF members said they aim to gain clarity on the current status of tax collection related to the Sugar scam.Further addressing the
issue, the committee highlighted its concerns over the proposed reversal of the tax policy, which aims to increase the Special Commodity
0.25/ per kilogram back to Rs
30 billion from the average Sri Lankan while allowing implicated corporations to evade responsibility was strongly criticized
The committee emphasized the need to hold wrongdoers accountable before imposing additional financial burdens on the general
public.Additionally, the committee engaged with officials from the Consumer Affairs Authority (CAA) to address concerns about the maximum
retail price (MRP) not being adhered to by distributors
The CAA officials revealed that despite conducting 342 raids and imposing fines on micro, small, and medium businesses exceeding the MRP,
challenges persist in penalizing wholesale distributors due to the absence of a maximum wholesale price in the gazette.The committee
directed the CAA to conduct a comprehensive study on the imposition of MRP, considering factors such as the Special Commodity Levy and
importer prices.Furthermore, the COPF requested the CAA to propose a mechanism to address the ongoing issue of wholesale distributors
selling above the MRP and engaging in fraudulent activities.Additionally, the Committee delved into the implications of the Order under
Section 22 of the Foreign Exchange Act No
This order outlines provisions designed to regulate the movement of funds and foreign exchange transactions for individuals and companies in
Sri Lanka, with the overarching objective of sustaining economic stability and effectively managing foreign exchange reserves.The migration
allowance, as stipulated in the order, remains at USD 50,000 with a reduced allowance of USD 20,000 for temporary visa holders
Officials from the Central Bank apprised the Committee of amendments to the previous gazette, including provisions allowing Sri Lankan
individuals to purchase share options in their own overseas companies
Additionally, individuals are now permitted to withdraw USD 200,000 for investment in listed companies and USD 100,000 for unlisted
companies.While acknowledging these changes, the COPF chairman raised concerns about the feasibility of maintaining such a low migration
He questioned the officials on the prevalence of individuals resorting to unofficial channels, such as Hawala and cryptocurrencies, due to
these restrictions.Furthermore, the COPF chairman inquired whether the officials were aware of instances where Sri Lankans were converting
their rupees to USDT (cryptocurrency) through various platforms such as Binance, and subsequently transferring funds abroad or investing in
Notably, cryptocurrencies were recently recognized as an asset class by the US Securities and Exchange Commission, with the approval of
to conducting a thorough study into the matter
They emphasized that exchanging rupees into dollars outside formal channels is not permitted, and they will investigate the potential misuse
of unofficial avenues for currency exchange and investment.
