“We will integrate the data and information system of Department of Customs (DoC) and Inland Revenue Department (IRD), allowing them as well as Department of Revenue Investigation and Department for Anti-Money Laundering Investigation to access them,” said a senior official at Ministry of Finance (MoF).[break]
The integration will be done through installing compatible software and loading the data into a main server, which will be managed and monitored by the Revenue Division of MoF.
In the absence of integrated information system, IRD and DoC were facing difficulty in cross-checking the facts and business details of firms. As a result, a large number of importers as well as local manufacturers were either not reporting their transactions to the tax offices or manipulating their records to evade data.
Through the new arrangement, however, MoF believes IRD will be able to trace parties that are engaged in imports or exports, but have not filed their taxes. “As IRD will easily know how much raw materials and other goods the firms imported, produced locally, have on stock or sold them, the taxpayers would not be able to dodge the revenue officials,” said the source.
The new mechanism will also support post clearance audit and timely review of customs valuation of the goods as Department of Customs, that so far has access to its own data of import rates, will be able to ascertain the final retail rates reported by the traders by accessing IRD´s record.
“This will help us check under-invoicing, which is regarded as one of the major evils causing revenue leakage and aberrations in the market,” said the source.
Likewise, it will enable Department of Revenue Investigation and Department of Anti-Money Laundering Investigation to closely monitor the trading and other business activities of suspicious firms and groups.
“Fundamentally, the new mechanism will also contribute to control financial crime,” said the source.
In a bid to tighten noose against tax evaders, IRD has already entered into an understanding with the Company Registrar´s Office (CRO), seeking it to regularly share information on all freshly registered business firms, those undergoing merger, selling shares and shutting down the operations.
Through the implementation of this understanding, IRD hopes to keep tracks of firms that are registered with the CRO but not registered with the tax office or not paying taxes on transactions of their share, among others.
“Most importantly, it will enable us to instantly track the firms in case of incidents like recent racket of fake VAT receipts,” said a IRD official.
Related story
Oli to address meeting of UML central departments
