Marikkar calls on Govt. to recover Rs. 5 b from tax evading companies

Samagi Jana Balawegaya (SJB) MP S.M. Marikkar yesterday called on the National People’s Power (NPP) Government, which came to power pledging to eliminate fraud, corruption, and theft, to punish companies that import unrefined coconut oil for evading taxes over Rs. 5 billion.

“The Government has lost tax revenue of Rs. 5 billion due to several companies failing to pay taxes on importing unrefined coconut oil. This has been reported in several media but the Government is silent over this scam,” he pointed out.

Marikkar said that these companies had evaded taxes of over Rs. 5 billion in 10 months and in a year, it caused more than Rs. 6 billion in losses for the Government. The NPP Government should immediately investigate these illegal profits earned by those companies by evading taxes.

Alleging that this is similar to the Central Bank bond scam, he said the Government had lost this tax revenue from 1 January 2024 to end of October 2024.

“Before 1 January 2024, a tax of Rs. 125,000 per metric ton was imposed on the import of unrefined coconut oil into Sri Lanka under special commodities and Rs. 150,000 per metric ton on refined coconut oil. The Gazette Notification issued before 1 January 2024 said that VAT would not be levied on imported coconut oil,” he explained.

He said however, the special Gazette Notification issued on 1 January 2024 regarding VAT did not include imported coconut oil in the list of goods that were not subject to VAT, and tax would have to be paid when importing coconut oil.

According to Marikkar, it has been reported that several companies have imported 38.8 million kilos of unrefined coconut oil, while four companies have imported 12.9 million kilos, 624,000 kilos, 18.8 million kilos, and 4.23 million kilos of coconut oil, respectively.

“Under the special Gazette issued on 1 January 2024, 18% VAT and 2.5% social security tax should be paid, but 20.5% tax has not been paid on every kilogram of coconut oil,” he stressed.

Meanwhile, according to Marikkar, a single company which imports coconut oil has been granted tax relief after writing a letter on 17 July 2024 to former President Ranil Wickremesinghe, who had forwarded it to the Department of State Fiscal Policy (DSFP) and Inland Revenue Department (IRD) on 31 July 2024.

“If a law in the country has been implemented through a gazette notification, all companies importing goods are subjected to that law. How can a single company subjected to that same law be asked whether it should pay tax or not? If it is sold without refining, only the Special Commodity Tax is levied at the time of import. The VAT is levied at the time of refining and sale. In that case, that company should declare that it is selling coconut oil without refining. If it does so, there will be major health issues,” he explained.

Accusing Wickremesinghe for requesting the IRD through the DSFP to provide tax relief to this company, he alleged that the same process continued under the NPP Government.

“After President Anura Kumara Dissanayake came into power, 38,000 tons of coconut oil have been imported until October 2024 without paying taxes. While continuously evading taxes, it is reported that these companies have also imported a large amount of coconut oil in November 2024,” he revealed.

Marikkar, questioning the Government as to why it still failed to take actions to stop this scam, said the SJB was to raise this issue at Parliament in the future.

“The Government should give a clear answer whether it will take steps to recover the tax money lost to the State or whether it will continue to allow such thefts and tax exemptions to continue under the NPP Government,” he added.

Claiming that the NPP took the mandate falsely, he said if the Government protects thieves and fraudsters, the Opposition was waiting to see what would be done to the companies that caused a tax evasion of Rs. 5 billion from importing unrefined oil.