News Today: Luxury tax exemption limit caused Rs. 1,384 million tax revenue loss

A detailed report by the National Audit Office reveals a staggering loss of Rs. 1,384 million in tax revenue due to the luxury tax exemption limit increase from Rs. 6 million to Rs. 12 million. This change impacted 510 vehicles imported under a special scheme designed for overseas workers to import electric vehicles.

The audit highlighted that as of June 30, 2024, only 375 out of the 510 imported vehicles were registered with the Department of Motor Traffic. Under this scheme, US$ 121,505,640 in foreign remittances was received, while USD 24,100,757 was utilized for vehicle imports.

However, the process revealed significant internal control lapses. Permit issuance was riddled with irregularities, including unethical handling by some officials of the Ministry. Applications were not adequately verified, and permits were issued to individuals whose foreign employment status could not be confirmed. Notably, four individuals who remitted a total of US$ 445,942 were granted permits despite questionable legalities.

Moreover, the required foreign employment duration for permit eligibility was vague. Circulars failed to define clear criteria, leading to permits being issued for individuals with brief or intermittent overseas travel. The Ministry’s lack of coordination with key authorities such as the Treasury’s Department of Trade and Investment Policy and the Controller of Imports and Exports further exemplified governance and accountability failures.

To prevent future misuse of government resources and policies, the report recommends implementing stricter oversight, clear guidelines, and improved transparency in administration. This incident underscores the urgent need for better policy enforcement to safeguard public revenue.