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Oral Questions - Tuesday 9th June 2009

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QUESTIONS FOR ORAL ANSWERS


To be raised by the Hon. Ravi Karunanayake when Parliament meets on 9th June 2009

1.      0001/’09

Hon. Ravi Karunanayake to ask the Prime Minister, Minister of Internal Administration and Deputy Minister of Defence, Public Security, Law and Order –

(a)     Will he inform this House the action taken on COPE reports presented by former Chairmen Hon. John Amaratunga, Hon. Jeyaraj Fernandopulle, Hon. Rohita Bogallagama and the report presented by Hon. Wijeyadasa Rajapakshe on the 12th January 2007?

Answer:

Matters arising out of the COPE reports presented by its former Chairman, Hon. John Amaratunga, Hon. Jeyaraj Fernandopulle and Hon. Rohita Bogollagama have been referred to the relevant Ministries for scrutiny and necessary action.

The report presented to Parliament by the COPE on 12th January 2007 has been submitted to His Excellency the President for information and necessary action.

A Committee consisting of Presidential Advisors has been appointed on the direction of His Excellency the President to look into the action that has been taken by the relevant Public Enterprises with regard to the matters referred to in the said report  and the steps that have been taken by the said Institutions to prevent recurrence of such situations.

This Committee is currently engaged in examining Secretaries to relevant Ministries. Accounting Officers and other key Officials charged with responsibility of running the Institutions concerned. This Committee has been collecting date needed and also advising them on what steps should be taken to prevent recurrence of such situations.

(b)     Will he state –

(i)  the action taken on the report dated 20th July 2006, submitted by Mr. Mayadunne, the former Auditor-General and the Report No. PS12 submitted by Hon. Rauff Hakeem, Chairman PAC on 29th November 2007;

Answer:

1. Subsequent to the release of interim report, in relation to the special project auditing on public tax revenue management, submitted by Public Accounting Committee, following 3 Committees were appointed in order to take further action for maters mentioned therein, activities carried out based on the recommendation of those Committees and the further activities are mentioned below.

i.          Committee on arrears of Revenue (for Audit Para 3.7)

ii.          Committee on Reliability of Data (for Audit Para 3.8)

iii.         Committee for Collection of VAT Rs. 271.25 Billion

(for Audit Para 4.7)

2. Accordingly legal recommendation made for the VAT Act No. 14 of 2007 is as follows:

i. Restriction of arising refunds, Restriction of input tax for businesses for 85% from output tax except for exporters (zero supplies) and new businesses (during project period)

ii. Make refunds in 15 days for those submit Bank Guarantee and to extend refunds up to 45 days for others.

iii. Legal deferment of VAT charged by exporter when importing (not to make financial payment when refunding)

iv. Steps have been taken to make required amendments to differ import VAT for capital assets imported to start new business.

v. To bring the institution registered in Textile Quota Board (TQB) and Export Development Board (EDB) and the institution making supplies to exporters under tax suspension systems for VAT for their supplies. Restricting tax refund through deferment of such imports when importing by the registered institution.

vi. Restriction of tax liability entitlement for inputs to the standard rate (15%) even if goods have been purchased under specific rates (20%) when making purchases locally or all inputs.

In addition to this, actions taken in respect of each Para of the report PS12 based on the recommendations of above Committee are as follow.

3. Arrears of Revenue (Audit Para 3.7 Chapter 2)

4.1.5     Steps taken with regard to the recommendations and conclusion made by the Committee in relation for the non submission of financial statements within the specific period.

i. More staff has been engaged in the relevant division

ii. Action has been taken to feed computer data through hardware for the payments made by the Bank of Ceylon in order to avoid delays when obtaining reports, feeding each payment slip. Until all regional offices and divisions are computerised, to fix a date with the Auditor General and Chief Accounting Officer to submit the report in arrears of revenue.

iii. Preparation of a system for computing financial balance of arrears of taxes more speedily than the existing method.

4.2.5          Action already adopted and present position on the recommendation and conclusions regarding reasons identified by the Committee in respect of continuous increase arrears of taxes.

i. Action were taken at the end of 2006 and 2007 to rectify arrears of taxes as far as possible after studying arrears files and taking the taxes in question and fines separately.

ii. A new circular was issued on 08.10.2008 related to the procedure on appeals containing instruction required for maintaining necessary documents after studying the matters mentioned in the appeal and identifying the taxes to be changed and to suspend other taxes.

iii. A Circular was issued on 18.01.2008 in order to minimise the issue of assessments which is issued with doubtful tax liability assuming as a reason for arrears of taxes and with shortcomings. Taking into account the shortcomings caused at the implementation of that circular, a methodology was prepared to issue VAT assessment notices referring to the assessment unit for recheck and without issuing them directly from the Computer Division. Before using an assessment for tax reported but not paid, instruction were given to Assessors to discuss with the tax payer to recover the tax and to take action to issue assessment if the tax payer not agreeing.

iv.Introduction of time bar regarding recovery of taxes and issue of assessment for outstanding taxes speedily through amendments made to the time bar for issue of assessments.

v.Decisions could be arrived at for many appeals accumulated in the Board of Review for trial, due to expansion of Board Review.

4.3.5     Procedures already adopted regarding recommendation and conclusion made in respect of the lethargic attitude towards collection of Goods and Services Tax.

i. Accordingly, in addition to the steps adopted in respect of arrears of revenue, a special unit for recovery of arrears of taxes has been established under a Deputy Commissioner and it is supervised by a Commissioner (Recovery)

4.4.4  Procedures already adopted regarding recommendations and conclusion made in respect of accumulation of arrears / default VAT Tax largely.

Reference answer given for 4.2.5

4.5.5. The procedure already adopted regarding recommendations and conclusions made in respect of not agreeing amount indicated in the arrears of tax statements by the Inland Revenue Department with the corresponding values published by other institutions.

i. A Committee on dishonoured cheques has been appointed with necessary instructions for non-examination of the correctness of the balance of the dishonoured cheques of the returns sent to the collection branch from the various divisions for computation of arrears of revenue.

ii. Action has been already taken to make necessary reconciliations to eliminate the discrepancies.

4.         Reliability of Data (Audit Para 3.8 Chapter 3)

Actions have been with regard to the observations and conclusions of the Committee regarding the reliability of data. Following proposals of the Committee appointed for this purpose have been implemented.

i. It has been specially proposed to make it mandatory to produce the following document to prevent the opening of VAT files which are non-existing in the Interim Report.

ii. Business Registration Certificate

iii. A copy of the National Identity Card or a copy of the Passport      

iv. In addition to the Company Registration Certificate, the Memorandum of Articles, Form 1 and 2A inclusive of information of Directors.

v. Commercial Invoice

A part from these measures, a set of proposals has been submitted for the sake of issuing revenue reports, receiving reports, editing reports, classifying reports and providing DLN, regulation the activities of the Computer Unit and storing the documents in an orderly manner by making out the shortcomings of the prevailing system.

5. Discrepancies in the Accounts / Registers relating to the computation of Tax Revenue (Audit Para 3.9 of Chapter 4)

Actions have been taken with respect to the recommendations and conclusions made by the Committee regarding the discrepancies in the Accounts / Registers in computation of Tax Revenue.

i. Reconciliation the payments of the Computer Unit by using Gen. 75 Form

ii. While the data available in the monthly progress reports are collected, the reports are compiled by reconciling them resulting these defects to become minimise.

6. Non-collection of Taxes on Assessments on Value Added Tax issued by the Department at 31st March 2006 – Rs. 271.0 Billion (Audit Para 4.7 of Chapter 5)

Action taken in respect of the recommendations and conclusions made by the Committee, regarding the non-recovery of VAT amounting to Rs. 271.254 Billion an assessment notes to 31st March 2006.

i.In the registration for VAT, the officers should inspect their taxable activity and in the registration of an exporter, he should have exported at least on three occasions.

ii.Regarding the assessment issued in reopen of VAT cases have already been filed in courts and further action on these cases is handled by the Recoveries Division.

iii.Officers have been instructed to observe administrative shortcomings and vague rules and regulations and to prepare new instructions and procedure to be followed.

iv. To assign all the officers attached to the VAT branches with the Duty List in writing.

v. Officers of relevant Units have been delegated with powers of Commissioner General in writing to be exercised when and where necessary.

vi.The following facilities have been provided for the sake of regularising the Assessments on VAT and Refunds thereof and for internal control.

(a) Formulation of strategies to regularise the transfer of files in VAT Units and other Units of the Department.

(b) Re-organisation of the VAT Refunds Unit, appointing four Deputy Commissioners and supervision of the work be deciding duties. In addition to this a Committee comprising three Commissioners has been appointed to decide on Refunds exceeding Rs. 5.0 Million and to grant approval thereby expediting the Refund activities.

(c) Further new instructions and procedures have been formulated and the officers have been provided with instructions having observed the ambiguity of certain rules, regulations and the shortcomings in the VAT Unit. A service of instruction has already been issued and its consequences are being monitored.

7. Test Check on the refund of Value Added Tax amounting to Rs. 3.6 Billion (Audit Para 4.8 of Chapter 6)

Action taken in respect of the recommendation and conclusion made by the Committee regarding the test check for the refund for VAT amounting to Rs. 3.6 Billion.

i. To develop a methodology for the documentation of every document received by the Computer Unit and send back the finalised documents, as a remedial measure to eliminate the granting priority for some returns and other documents disclosed at the study of the procedures in connection with the Data Processing Unit and the Computer Development Unit.

8. Questionable payment of Rs. 114.6 Million as refund as Goods and Services Tax (Audit Para 4.9 of Chapter 7)

Action taken with regard to the recommendations and conclusion made by the Committee regarding the Questionable payment of Rs. 114.6 Million as refund of Goods and Services Tax.

i. Conducting of preliminary investigation with regard to the frauds.

ii. Identification of possible circumstances for such frauds or improper activities and to propose the preventive measures.

9. Action taken in relation to the recommendations and conclusions made by the Committee in Chapter 1.

i. Making arrangements to expedite the answering of Audit queries with the allocation of more staff for the Assessment Control Unit and with the establishment of the Internal Accounts Unit hereby upgrading the Internal Control states.

ii. Taking into consideration the facts revealed at the investigations in relation to VAT and fraudulent actions, a separate branch for Post Auditing on refunds was established and to refer them with special targets for post auditing of refunds among other units too and to implement the activities of these units under the supervision of a separate Commissioner.

iii. Take action to establish a Special Collection Unit parallel to the Budget Proposals made with regard to outstanding tax and carry out the deduction of outstanding tax and collection with specific targets.

iv. Giving all the officers a revised duty list, recruitment of staff and training are important activities among other activities, which have been already commenced. Steps have been taken to increase the number of officers hereby strengthening that Unit.

v. Giving all the Officers duty lists.

vi. Delegation of powers to Officers to be exercised in their activities.

vii. the Institutions investigated as per above;

Answer:

Investigated institutions done by the Inland Revenue Department.

i. Private Companies

i. Inimag Apparels (Pvt) Ltd.                               -           114214833       
ii. Inimag Kandy (Pvt) Ltd.                                  -           114274224
iii. World Gate Apparel (Pvt) Ltd.                         -           114216623       
iv. World Gate Euro Apparel (Pvt) Ltd.                 -           114231630
v. South Lanka Garment Industries (Pvt) Ltd.        -           114243531
vi. Lotus Apparel (Pvt) Ltd.                                 -           114200115
vii. Upali Garment (Pvt) Ltd.                                 -           114092908
viii. Lotus Garments (Pvt) Ltd.                              -           114168467
ix.  Lord and Taylor (Pvt) Ltd.                               -           114190870
x.  Kanbro International (Pvt) Ltd.                         -           114075612
xi. Minipe Garments (Pvt) Ltd.                               -           114171417

The action taken:

  • Passports are prohibited of the Directors of two institutions
  • Notices have been issued for acquiring properties of institutions of default arrears of Value Added Tax
  • Reports have been sent to Colombo District Courts to acquire VAT Arrears.

ii.          Partnerships     

i.          Pro Garments                                                    -           409162070
ii.          Lanka Universal Garments Exports                      -           409027687       
iii.         Lotus Garments                                                 -           409103111
iv.         Euro Clothing                                                     -           409167632
v.          Uni Line Apparels                                               -           409166164
vi.         Kohb Apparels                                                   -           409162517
vii.        Creative Apparel                                                -           409002633

The action taken:

File Court Cases to acquire Tax arrears.

iii.         Individuals

i.          Creations Apparels (Ali M.S.L.)                           -           740105060
ii.          Abdul Kareem SL (Polytex Apparels)                   -           620844691

The actions taken:

File Court Cases to acquire Tax arrears

(iii)         the action that has been initiated with the directions of the Committee Report?

Answer:

In relation to Arrears of Revenue (Audit Para 3.7 of Chapter 2)

4.1.5  Future activities with regard to the recommendation and conclusions made by the Committee in relation to the non-submission of financial statements within the specified time frame.

i. Though it is not in the due date, when comparing with the previous years, the delay of the submission of returns has been eliminated and mid year returns on outstanding tax have been already prepared to submit for the Auditor General. Further, a programme for the preparation of outstanding tax monthly has been implemented in Regional Offices and City Offices.

ii. Arrangements have been made by the Committee to build up a methodology to be implemented for the Units where the preparations of these monthly reports have been computerised.

4.2.5     Action regarding the recommendations made and the decisions taken on the reasons identified by the Committee regarding the continuous increase in tax arrears.

Settlement of Tax Arrears (Special Provision) Act to deal with Tax arrears of the Inland Revenue Department as at 31.12.2007 has already been drafted by the Legal Draftsman and recommendations of the Attorney General have been obtained and action has been taken to submit if for Cabinet approval and eventual approval of the Parliament.

According to the proposed provisions of the Act, it has been proposed:

  • To create a separate Division in the Department of Inland Revenue under a Deputy Commissioner of Inland Revenue to take action regarding all Tax Arrears as at 31.12.2007.
  • To appoint a Board of Supervision under a retired High / Supreme Court Judge to take a final decision on Tax Arrears.
  • Course of action proposed by the said Act for the recovery of outstanding Tax Arrears.
  • To consider to write-off arrears of government institutes whose taxes have to be paid from financial provisions received from the Treasury.
  • To make the Commissioner General of Inland Revenue personally responsible for the maintenance of Tax Arrears of a particular year in keeping with the Tax Revenue collected by the Department of Inland Revenue during the preceding years.
  • Opportunity has been afforded to the Cabinet of Ministers to decide on the maintenance of the level of Tax Arrears as mentioned above.

Accordingly, it will be possible to take a quick final decision regarding the existing tax arrears in the Department of Inland Revenue and to limit the increase in Tax Arrears in the future.

4.3.5     Future actions with regard to the recommendations and conclusions made by the Committee in relation to the slow functioning of collection of Goods and Services Tax.

i. Monitoring of the duties of the Officers to make sure whether they have fulfilled their duties in accordance with their duty lists.

ii.In addition to this, arrangements are being made to take the initiative such as updating the prevailing procedure relating to Units dealing with outstanding taxes and formulating a Special Collection procedure for the Computerised Units.

4.4.4     Future activities with regard to the recommendation and conclusion made by the Committee in relation to the accumulation of arrears/default VAT Tax largely.

i. It has been determined that a methodology is essential to obtain data according to the due date and the manner of submitting the reports on outstanding taxes. Accordingly, actions will be taken in future to develop a methodology through the newly recruited Computer Consultant.

4.5.5     Future actions with regard to the recommendation and conclusions made by the Committee in relation to the non-reconciliation of the amounts declared in the statement on outstanding taxes by the Department of Inland Revenue and the Revenue Data declared by other institutes.
i. Facility to obtain online information from the Customs.
ii. Online facility to obtain Export Development Board Data (EDB)
iii. Online facility to obtain Textile Quota Board (TQB) data.

 

4. Reliability of Data (Audit Para 3.8 – Chapter 3)

Future actions have been taken in relation to the recommendation and conclusions made by the Committee regarding the reliability of data.

i. Many steps have been taken to confirm on the reliability of data. Action is being taken by studying the procedure currently adopted for the purpose to examine its accuracy.

5. Discrepancies in Accounts / Registers relating to the Computation of Tax Revenue (Audit Para 3.9, Chapter 4)

i. It has been proposed to formulate a proper, permanent and timely process in relation to transfer of file, opening and cancelling of files with a view to eliminate these defects, and it has been further proposed to study whether they are implemented as such and to conduct annual census of file records.

6. Non-collecting of Taxes on Assessments on Value Added Tax issued by the Department as at 31st March 2006 – Rs. 271.254 Billion (Audit Para 4.7, Chapter 5)

Further action has been taken with regard to the recommendations and conclusions made by the Committee in relation for the non-collection of Rs. 271.254 Billion, based on assessment notices on VAT dated 31st March 006.

i. Legal action has been already taken and necessary arrangements are being made in that regard

7. Test Check on the Refund of Value Added Tax amounting to Rs. 3.6 Billion (Audit Para 4.8, Chapter 6)

Future action with regard to the recommendation and conclusions made by the Committee in relation to the Test Check on refund of Rs. 3.6 Billion of VAT.

i. Study of the procedures and formats in relation to the provision of TIN Numbers and registration for VAT. When a new file is opened, all the particulars relating to the file concerned at the time of opening the file or within a period of a month from that date about the particulars of the Head Office, Factories and other Units should be obtained through a spot check. Similarly the Tax Payers” Registration Form should be improved.

ii. Subsequent to the refunds made within 15 days during the VAT Refund process from issuing the Returns to the issuing of refunds instruction note, it is mandatory to conduct an Audit before the next refund. Compulsory auditing of the files for every 6 months where large refunds are made, opening of permanent files for refunds and facilitation for field experiments where necessary are proposed remedies.

iii. Study about the process in relation to the Data Processing Unit and Computer Development Unit.

iv. Formulation of Computer reconciliation procedure taking the sum manually according to the batch method to verify the accuracy of the computerised data on returns.

8. Questionable Payment of. Rs. 114.6 Million as refund of Goods and Services (Audit Para 4.9, chapter 7)

Future actions have been taken with regard to .the recommendation and conclusions made by the Committee in relation to the refund of Rs. 114.6 Million of Goods and Services tax subject to Questionable.

i. The Committee has mainly focused on identifying circumstances leading to such things and proposing remedial measures. Accordingly, it has been decided to appoint sub-committees under the following fields in that regard and to investigate report and make arrangements about such matters.

ii. Study about the process and formats in relation to the Tax Payer identification Number (TIN) and Registration for VAT.

iii. Study the process from issuing of returns to issuing of refund instruction note in the process of VAT refund.

iv. Study the formats and process that link the Data Processing Unit and the Computer Unit.

9. Future actions have been taken with regard to the recommendation and conclusions made by the Committee in Chapter I

i.It is necessary to define the functions and the duties of each officer clearly and to attach sufficient staff.

ii.To find out the fact regarding the determination of a suitable criteria to monitor the performance of the officers in each Unit

iii.Discussions are being now conducted in relation to the determination of suitable criteria to measure the performance of the officers in each unit.

9.2        To establish and maintain reliable accurate Broad Management Information System enabling to maintain co-ordination among the institutions which have engaged in Public Tax Management. Maintaining a secured data sub-system to eliminate the risk of deletion of data, unauthorized use of data within the system and to avoid the access into the data base with unauthorized continuous monitoring power. Following actions will be taken in this regard.

i. It is expected to establish a Reliable and Accurate Management   information System (RAMIS) enabling to maintain co-ordination between the institutions which have engaged in public tax management.

ii. Certain steps have been taken with regard to other facts and the functions relating to the maintenance of sub-data system will be accomplished during this year.

iii. To conduct Public Seminars targeting the tax payers in district levels. (Special television programmes were telecast and other programmes were implemented parallel to the 75th Anniversary of the Department).

iv. Simplification of tax process – steps would be taken to simplify the Returns on Income Tax and instruction leaflets will be issued. Similarly a VAT manual had been issued in English in year 2008 and the Sinhala version will be issued within the year 2009.

v. Similarly assessment units were assigned the tasks of providing consultant services during Year 2008 having visited the business organisations of tax payers.

vi. Further, it is expected during year 2009 to issue updated special instruction leaflets for the employer in relation to PAYE, to issue instruction leaflets in respect of returns on PAYE and to formalize the PAYE tables.

9.7  Keeping the Internal Audit activities strengthened, reviewing the progress and performance of each unit from time to time and make necessary rectification.

i. Action has been taken to decentralize the post audits conducted on refunds made under bank guarantees and the Commissioner (VAT) will be held responsible for all such activities.

ii. Establishment of a Special VAT Audit Unit.

iii. Post audits on refunds made to institutions registered under the EDB to be carried out under a separate Deputy Commissioner.

iv. In case when there is any doubt with regard to refunds for new projects / new business, such business will be subject to field inspection.

v. Appointing a separate Commissioner to supervise all VAT refunds and post duties.

9.8 Formulation of a methodology to confirm whether the VAT refunds have been received by the preview institution. A suitable Committee has been appointed to formulate a methodology to study the weaknesses caused in VAT refund process deeply and to uplift it again. Accordingly, following proposals have been made and steps will be taken to implement them in the future registration of VAT.

i. Making in mandatory to produce documents proving the existence of the business, in addition to the documents required for the registration.

ii. Especially, in the case of exporters (zero rated supplied) it has been made mandatory for them to make three (03) exports and to apply for registration then only, and to confirm such exports. Such supplies are verified by examining through the Computer Date or Bank Remittances, prior to such registration.

iii. Registration on account of a new business/project under section 22(7) of the VAT Act shall be approved by the Commissioner (VAT) himself and making in mandatory to conduct a field inspection before registration and include the inspection report in the file.

9.9 Issuing of Returns

i.Increasing the number of Officers and taking steps to strengthen the limit.

ii. In issuing written instructions with regard to the responsibilities assigned for the assessor in relation to VAT refund and each Commissioner concerned.

iii.In the case of every refund exceeding Rs. 5.0 Million, making it mandatory to issue instructions to the effect that such payment of VAT refund shall necessarily be approved by a Committee comprising of three Commissioners.

iv Join with the Department of Customs directly when obtaining information relating to imports and exports and feeding relevant data to Computer network.

v. Making it mandatory to balance the Computer data with the Department of Customs when making payment to exporters

vi. In the case of Refund, relating to the registered person (other than zero rated supplies) it shall become the entire responsibility of the Deputy Commissioner of the relevant Unit where those files are maintained. The identity of the Officer concerned is necessary for the documents relating to the refunds and documents would be stored under entire supervision of the Deputy Commissioner.

vii. In the case of first payment of any VAT Refund, making it mandatory to effect such refund subsequent to a full Audit (including Field Audit).

viii.       For the purpose of obtaining information on the institutions registered as indirect exporters with the TQB and EDB, they have been directly connected to the computers. Refunds to be made only after confirmation and scrutinisation of relevant documents.

9.10      Develop an Information Network required for Tax Management

i.Steps are being taken in this regard by the Financial Management Reform Project. Arrangements have been made to develop a new system as Revenue Administration Management Information System (RAMIS) thereby enabling to build up a relationship among all the Departments / Institutions.

9.11      These information should be developed so that they are reliable reasonable and accurate as far as possible covering each area and they should be constantly updated securing the validity of the information. Every field required for the management of that information network should be covered and there should be a possibility of confirming the validity and accuracy of them. Following steps have been taken in that regard.

i. Initiatives have been taken by the Financial Management Project for the Local Asia Network / Wide Asia Network in the Department. In addition to that, arrangements have been made to increase the capacity of the prevailing Computer System.

ii.Steps have been taken to confirm the accuracy of data at the time of entering the data into the Computer and entering the data into the System respectively, through original verification and key verification.

9.12      While the information network so developed can be used to assist management decisions, should make sure to use it for management decisions indeed. The steps taken in this regard are as follows.

i. While the Financial Management Project has already called tenders from suitable people to establish the Local Area Network, arrangements are being made to offer the tender accordingly.

9.13      It has become necessary to introduce a protective methodology to disclose and prevent the improper deformation, and erasing out of Computer Data. Following steps have been taken in this regard.

i.It has been mandatory to use source documents to feed the data into the Computer. Data stated in the documents produced by the tax payer or data appearing in the documents certified by the relevant Unit should only be entered into the Computer.

ii.Take action to keep every computerised document under document location number for later use.


9.14      Scientific information technologies should be used with safety measures so that the information can be exchanged and compared between and within the main institutions dealing with Tax Management in a secured manner.

i.It is expected to exchange information between the main institutions dealing with the Tax Management through the establishment of Revenue Administrative Management Information System, which has been already designed.

9.15      While an integrated plan covering the entire structure on Tax should be handled by a centralised organisation, systems and administration methodologies should enable an efficient and effective functioning of Tax Management.

i. Systems and administration methodology which can manage the tax structure through an integrated plan is expected by the introduction of Revenue Administration Management Information System.

9.16      With the proper identification of the necessity of the coverage for the secrecy, the parts which do not require the secrecy can be dealt with a transparent and open manner.

i.          It is implemented in terms of the sections disclosed in Tax Acts. It will act with transparency as far as possible regarding common facts.

9.17      It is suitable to subject the decisions taken at that time of determining, collection and refund of tax into suitable internal control method. It should be taken into account that the suitability for none of the Officers or several Officers to grant the extreme discretionary power without internal control.
i.          It is expected to make relevant alterations with regard to the procedures taking into consideration the recommendations of the appointed Committee.

9.18.     While the instructions issued in relation to the determination of tax should be clear and simple, it is suitable to publish them so that the Officer as well as the Public can easily understand them.

i .          Maximum efforts have been made in this regard concerning about the possibility of making wrong definitions when presenting simple explanations regarding legal provisions.

9.19      Development of a methodology to take follow-up monitoring regarding the irregularities in the determination of tax.

Attention has been referred to improve Assessment Control Section and increase the Staff of this Section in due course.

9.20      Internal Audit should be strengthened. While it should allow to take action within the field relating to the Internal Audit fearlessly and without any restriction, requirements such as necessary technical and professional knowledge and the infrastructural facilities should be provided to carry out the functions.

i.          In addition to the Special Units in each Government Institution in charge of the Management of Internal Auditing, the suitability of having a special Internal Audit Branch under the Ministry is also being taken into consideration.

9.20      To cover up such important areas by the proposed Internal Auditing which cover the whole Public Sector under His Excellency the President, who is holding the responsibility of the whole Executive, is very effective action.

i.          Further facilitation and implementation of recommended matter n relation to the recommended points specified under above 7.19, 7.20 and 7.21 will be carried out in due course.

ii.          Arrangements have been made to prove the identity of the Officer computerising the data in returns.

3.      0002/’09

Hon. Ravi Karunanayake – To ask Minister of Finance and Planning –

(a)     Will he inform this House –

(i)            when was the Lankaputhra Bank incorporated and its capital;

Answer:

Lankaputhra Development Bank Limited was incorporated as a Public Limited Liability Company on 24th February 2006.

Initial Capital of the Bank was Rs. 1.5 Billion contributed by the Treasury / Ministry of Finance. The Capital of the Bank has been increased to RS. 3.6 Billion as at 31.12.2008/

(ii)          whether it has been invested by Non-banking Institutions;

Answer:

No.

(iii)         if so, the ordinary shares, preference shares and the debentures separately;

Answer:

No.

(iv)         the accounts to date from the inception;

Answer:

Audited Financial Statements of the Bank for the period ended 31.12.2006 and for the years ended 31.12.2007 and 31.12.2008 were tabled.

(v)           the names of the staff members working there at present; and

Answer:

Details were tabled.

(vi)         the names of the top 05 Staff members along with their emoluments and total perks given to them on per month basis?

Answer:

Relevant details were tabled.


(b)     Will he state –

(i)            the interest rates prevailing at this time;


Answer:

Relevant details were tabled.

(ii)          the percentages of loans given along with the interest rates?

Answer:

Relevant details were tabled.

(c)     If not, why?

Answer:

Does not arise


3.      0003/’09

Hon Ravi Karunanayake – To ask the Minister of Mass Media and Information and Minister of Enterprise Development and Investment Promotion –

(a)     Will he inform this House –



(i)            the number of TV stations that are in operation in the country;



(ii)          the number of licences issued to operate TV Stations that have still not come into operation; and



(iii)         the frequencies of their telecasting TV Station?



(b)     If he aware that the Government had introduced taxes to discourage the foreign TV films flowing to the country with the intention of assisting the local film industry?



(c)     Will he state –



(i)            whether it has achieved its objective;



(ii)          if so, where and how these benefits have been obtained, and



(iii)         the amount that has been paid by each TV Station per month since the tax was imposed to date?



(d)     Will he also state –



(i)            the other taxes that have been imposed on these TV Stations; and



(ii)          the amount earned by the Government for the last 12 months separately?



(e)     If not, why?