By Wasana Nadeeshani Sellahewa
(Commonwealth) _ This article highlights the findings of a study published by the Global Financial Integrity Center in Washington regarding the misrepresentation of data on import and export commodities by large-scale merchants in Sri Lanka over the past 10 years. The study reportedly reveals that these merchants have misrepresented data to the tune of almost 40 billion US dollars, which translates to a currency value of over Rs. 14 trillion in Sri Lanka.
The news conference was held in Colombo and was conducted by Mr. Dhanusha Pathirana, an economic expert. He stated that the study report was published in December 2021 and covered 134 nations worldwide. The report reveals that large-scale merchants in Sri Lanka have been falsifying data related to the import and export of commodities, resulting in significant losses to the country’s economy.
This type of fraudulent activity can have serious consequences for a country’s economy. It can lead to a loss of revenue, a decline in the value of the currency, and an increase in inflation. Additionally, it can harm the reputation of the country and deter foreign investors. The news report underscores the importance of implementing measures to prevent such fraudulent activities and ensuring transparency and accountability in trade transactions. This includes effective monitoring and enforcement mechanisms, as well as policies and regulations that promote ethical business practices. By taking these steps, countries can safeguard their economies and ensure sustainable growth and development.
A significant quantity of money has reportedly departed Sri Lanka in the form of dollars between 2018 and 2019, he added, citing the report. The news report highlights that individual, particularly businesspeople in Sri Lanka, are engaging in fraudulent activities by manipulating genuine import and export prices and creating phony invoices to gain unfair profits. This type of fraudulent activity is a significant factor contributing to the enormous outflow of wealth from the country every year.
By falsifying data related to the import and export of commodities, these individuals can underreport the value of goods they are exporting, thus paying lower taxes and duties to the government. Similarly, they can overreport the value of goods they are importing to claim higher subsidies and incentives from the government. This type of activity is not only unethical but also illegal and has serious consequences for the country’s economy. It can result in a loss of revenue for the government, leading to a decline in the value of the currency, inflation, and a negative impact on the balance of trade.
Moreover, the outflow of wealth from the country can have a significant impact on the overall economic development of the nation. The funds that are leaving the country could otherwise have been utilized for investment in infrastructure, education, health, and other critical sectors. The speaker in the news report emphasizes the need to curb these fraudulent activities by implementing effective monitoring and enforcement mechanisms, strengthening regulations and policies, and promoting ethical business practices. By doing so, the country can prevent the outflow of wealth and safeguard its economy’s sustainability and growth.
Mr. Danusha Pathirana, an economic expert, has identified the reasons behind the enormous outflow of wealth from Sri Lanka. According to him, the nation is losing this money due to the preparation of fictitious documents for import and export commerce, tax evasion, and profit concealment. Fictitious documents are created when businesspeople manipulate the prices of goods they are exporting or importing. They falsify invoices and other documents to report lower values of exports and higher values of imports to the government, thus evading taxes and duties. This results in a loss of revenue for the government and contributes to the enormous outflow of wealth from the country.
Tax evasion is another factor that contributes to the loss of wealth from Sri Lanka. Businesspeople who engage in this activity underreport their income, profits, and assets, and fail to pay taxes on them. By doing so, they evade paying their fair share of taxes, leading to a loss of revenue for the government. Profit concealment is yet another factor that contributes to the outflow of wealth from Sri Lanka. This occurs when businesspeople manipulate their accounts to conceal their profits. They underreport their profits to avoid paying higher taxes and also to keep their profits hidden from the government.
These activities are not only unethical but also illegal, and they have a severe impact on the country’s economy. The loss of revenue for the government leads to a decline in the value of the currency, inflation, and a negative impact on the balance of trade. Moreover, the outflow of wealth from the country can result in reduced investment in critical sectors such as infrastructure, education, and health, which are vital for the country’s overall economic development. To address these issues, effective monitoring and enforcement mechanisms, stronger regulations and policies, and the promotion of ethical business practices are needed. By doing so, the country can prevent the outflow of wealth and safeguard its economy’s sustainability and growth.