A group of retired officials of the Inland Revenue Department (IRD) has launched a consultancy service to help several tax payers they made friends with while still working at IRD to further reduce the tax amount to be paid ultimately depriving the country of a considerable amount in tax revenue, Sri Lanka Mirror learnt.

The consultancy service has been launched by IRD official N.M.M. Mifly retired on July 21.

After retiring from the IRD, he started a tax consultancy service called MIFA in Bambalapitiya.

Mifly has sent detailed messages and e-mails to several taxpayers who are close friends about his new tax consultancy firm.

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It was reported that Mifly, while in the IRD, has handled the duties of tax policy formulation and international taxation.

It was also revealed that he has taken the lead in collecting a 1% small tax for undisclosed incomes according to the tax reforms introduced in 2021.

IRD trade union sources said that businessmen who benefitted from the tax exemption to launder black money were able to carry out their work easily with Mifly’s support.

Though it is necessary to inform the tax officials about the taxpayers who have disclosed their income in order to execute tax audits efficiently in the coming years, it was reported Mifly and the current Commissioner General have not released the necessary information so far.  

A trade union leader told us that Mifly, who was hoping to open up a tax consultancy firm after retirement, has issued a circular for internal tax audits to IRD officials through the Commissioner General in favour of these moves.

Due to this circular, the tax audit process which has been conducted so far according to the Act has been disrupted and a conflict has been created between the upper administration and the lower officials.

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Meanwhile, it was reported that an officer named Rukdevi Fernando who was vying for Mifly’s post has pretended to explain the circular to the officials in a hurry on the day of Mifly’s retirement, in order to get rid of the issues she may have to face in the future. However, she had not been able to provide proper answers to the officials regarding the circular.

Internal sources said that due to this document, tax audit activities have been hampered and that it would make an impact on the overall tax revenue of the country.

It was rumoured that IRD Commissioner General Ranjith Hapuarachchi, who is about to retire in a few days, is also willing to join ‘MIFA’.

Commenting on this, a former IRD Commissioner General said that it is not ethical for the retiring officers to work together with the taxpayers externally.

Accordingly, he said that a retired officer should be prevented from engaging in work-related matters at least for three years upon retirement.

He also said that such situations should be rectified immediately in order to create a transparent tax system and to increase the confidence of the taxpayer.