By: Staff Writer
March 30, Colombo (LNW): A recent audit report by the National Audit Office (NAO) has raised concerns over a major telecommunications company’s decision to write off Rs. 77.71 million in telecommunication tax dues as bad debts.
This development has sparked criticism regarding financial transparency and tax collection practices within the Telecommunications Regulatory Commission (TRC).
The sum in question comprises taxes collected from three private companies under the prominent telecommunications firm, originally intended for remittance to the TRC.
The breakdown of the amounts written off includes Rs. 35.77 million, Rs. 30 million, and Rs. 11.93 million. However, the company has informed both the Treasury and the TRC that the total will not be settled, as it has been classified as bad debts.
The NAO has criticized the failure to record this amount as a telecommunication tax receivable in financial statements, citing Section 3 of Part I of the Telecommunication Levy Act No. 21 of 2011.
The audit office has urged immediate measures to recover the outstanding tax, emphasizing the serious implications of allowing such write-offs.
In response, the TRC management explained that the amount was omitted from financial statements because an explanation letter was not received before the preparation of the 2023 accounts.
Consequently, despite a letter from the Competition Division to the Treasury, the sum was not included as a receivable. Additionally, as of December 31, 2023, trade debtors owed Rs. 372.76 million.
The audit report also reveals long-standing outstanding balances, including Rs. 15.10 million owed since 1976.
Furthermore, Rs. 174.80 million (46% of total debts) has been owed by another private company since 1993, while Rs. 145.25 million (40% of total debts) remains unpaid by the Sri Lanka Broadcasting Corporation since 1976.
The NAO attributes this issue to the absence of a structured system for recovering overdue frequency income.
The fiscal report released on February 17 indicates that as of October 2024, the Telecommunication Levy (TL) has achieved 73.3% of its annual revenue target, collecting Rs. 13.6 billion out of a projected Rs. 18.5 billion.
This shortfall highlights concerns about the efficiency of revenue collection. Compared to the same period in 2023, TL revenue has declined by 9.8%. In contrast, other tax revenues have increased by 34.6% to Rs. 106.4 billion, mainly due to higher cess charges and import-related taxes.
Despite these findings, TRC Director General Air Vice Marshal Bandula Herath stated he was unaware of the tax issue cited in the NAO report.
Furthermore, he confirmed that the matter had not been discussed at the TRC Board level, raising further questions about oversight and accountability in the sector.
