The Inland Revenue Department (IRD) has intensified its crackdown on businesses unlawfully charging Value-Added Tax (VAT) from customers without being registered for VAT, a senior official confirmed.
According to the official, VAT-registered businesses must prominently display their VAT registration number during transactions. Customers affected by such illegal practices are encouraged to lodge complaints directly with the IRD Commissioner General. The IRD has responded to numerous complaints and taken action accordingly.
Following a customer complaint alleging unauthorized VAT charges by a specific organization not registered for VAT, IRD officials conducted a raid on the business in Colombo city. They seized documents and computers for further investigation. Initial attempts to enter the premises were resisted by the management, requiring the IRD to seek police assistance to gain access.
The senior IRD official mentioned that aside from the seized materials, a separate audit inquiry has been initiated to examine whether the entity, part of a group of companies, maintained VAT records and paid relevant taxes.
The official explained the process, stating that upon receiving complaints, the IRD assesses the VAT liability based on an annual turnover threshold of Rs 80 million and verifies tax payments.
If an entity or individual is found non-compliant with VAT regulations, legal action and penalties can be imposed. Additionally, the department can conduct an assessment to recover levied funds.
Individuals who believe they were incorrectly charged VAT by an unregistered entity can provide details such as names, addresses, and transaction proof to the IRD Commissioner General for further action against the offenders.
