Sri Lanka’s flagship digital visa initiative hailed as a step toward modernized border management has come under intense scrutiny following an audit that uncovered major financial and procedural irregularities, including tax evasion, foreign remittance violations, and breaches of procurement law.
The special audit investigation into the e-Visa system, implemented earlier this year, found that private contractors GBS Technology Services and IVS Global-FZCO, operating under VFS VF Worldwide Holdings Ltd, failed to remit more than USD 1.4 million in taxes due to the government between April and August 2024.
According to the report, the companies collected both the 2.5% Social Security Contribution Levy (SSCL) and 18% Value Added Tax (VATamounting to USD 172,970 in SSCL and USD 1,245,390 in VAT from visa applicants but did not pay these funds to the Inland Revenue Department.
The audit also revealed that the firms handled 373,991 visa applications during the period, earning USD 6.9 million in service fees, and an additional USD 1.82 million from 98,401 visa-exempt applications. Despite being part of a government free-visa tourism promotion scheme, travelers from exempted countries were still charged USD 18.50 per application a move auditors condemned as “unjustified and exploitative.”
Tourism and legal experts have criticized the sudden escalation of visa-related charges. Under the former Electronic Travel Authorization (ETA) system, no service fee was levied, and a proposed upgrade had recommended a minimal USD 1 fee. The steep rise to USD 18.50 even for promotional travel categories has raised suspicions about how such rates were approved and by whom.
The audit further exposes serious procedural lapses in awarding the e-Visa contract. The Committee on Public Finance (COPF) noted that VFS Global and its affiliates were selected without competitive bidding or adherence to public procurement laws, undermining both transparency and value for money.
In a particularly troubling revelation, auditors found that visa fee revenues were routed directly to foreign bank accounts managed by the private service providers instead of being deposited into official Sri Lankan government accounts. This practice has prevented authorities from independently verifying the actual income generated, creating what the report described as “a significant accountability gap.”
The Department of Immigration and Emigration, according to the findings, had limited oversight over the project’s financial operations, leaving public funds exposed to potential misuse and weakening state control over a key national revenue stream.
The revelations have triggered calls for a parliamentary inquiry and for the temporary suspension of the e-Visa system pending accountability measures. Critics argue that such opaque dealings jeopardize Sri Lanka’s efforts to rebuild investor confidence and project an image of transparent governance at a time when economic credibility is critical.
With pressure mounting, the Finance Ministry and Attorney General’s Department are now being urged to recover lost revenue and initiate legal action against those responsible, as the scandal threatens to tarnish one of Sri Lanka’s most high-profile digital modernization projects.
