Sri Lanka Customs, Customs House, Colombo.11
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2010 Sri Lanka Customs, Customs House , Colombo.11 Annual Performance Report 2010 Sri Lanka Customs ii Sri Lanka Customs As at 31.12.2010 PRINCIPAL OFFICIALS Mrs. W. Sudharma Karunaratne Director General of Customs Mr. Duminda Jayarathne Additional Director General of Customs (Human Resources) Mr. P.A. Dias Additional Director General of Customs (Corporate) Mr. W.A. Chandradasa Additional Director General of Customs (Revenue & Services) Mr. Z.A.M. Jazeel Additional Director General of Customs (Enforcement) Mr. W.L.D.R.A. Kumarathilake Director of Customs (Human Resource Management) Mr. R. Dharmapala Director of Customs (Human Resources Development) Mrs. K. Gunawardena Director of Customs (Employee Services) Mr. R.P.D.T. Seneviratne Director of Customs (Policy, Planning and Research) Mr. N.K. Sivakumar Director of Customs (ICT) Mr. P.W. Amaradivakara Director of Customs (Central Valuation) Mr. A. Kulendran Director of Customs (Specialized Services) Mr. Asanka Dayaratne Director of Customs (Logistics) Mr. J.H. Kodikara Director of Customs (Declarations) Mr. B.J.P. Perera Director of Customs (Industries and Services) Mr. S.D.S. Gunatunga Director of Customs (Cargo Examinations) iii Mr. M. Puviharan Director of Customs (Passenger Services) Mr. A.H.K.J. Chandrasiri Director of Customs (Revenue & Services – Katunayake) Mr. S.D. Udawatta Director of Customs (Passenger Services, Katunayake) Mr. K.K. Balachandra Director of Customs (Revenue & Services-Provincial) Mr. K.L.G.T. Perera Director of Customs (Preventive) Mr. P. Yoganathan Director of Customs (Social Protection) Mr. S.Rajendran Director of Customs (Post Clearance Audit) Mr. D.A.I. Daranagama Director of Customs (Central Investigations) Mr. C. Wickramanayake Director of Customs (Legal Affairs) Mr. C.N. Rajaratnam Director of Customs (Central Intelligence) Mr. K. Ranjan Director of Customs (Special Tasks and Vigilance) Mr. Saman Fernando Director of Customs (Appeals) Mr. M.K.S.D. Alwis Director (Finance) Mrs. K.D.R. Olga Director (Systems and Procedures Compliance Audit) Mr. W.B. Weheragoda Director (Excise) Mr. Cyril Herath Deputy Director (Statistics) iv DC Administration DD Statistics DC ADP DC Air Cargo DC BIA DC Baggage and Project - I Narcotics DC Bonds DC CCED DC Exports DC HRD DIRECTOR D Finance GENERAL OF CUSTOMS DC Imports and Tariff DDC Legal Affairs DC PP & R DC Preventive DDC Central Invest igation DC Valuation DDC Central Intelligence ADC Revenue Task Force Project - II D/ Excise (Specia l) )Provisions) Organization structure of Sri Lanka Customs as at Dec 31, 2009 v DC – Preventive DC – Social Protection ADGC DC – Post-clearance Audit (Enforcement) DC – Central Investigations DC – Legal Affairs DC – Central Intelligence DC – Declarations DC – Industries and Services DC – Cargo Examinations ADGC (Revenue & DC – Passenger Services (Colombo) Services) DC – Passenger Services (Katunayaka) DC – Revenue & Services (Provincial) DC – Revenue & Services (BIA - Katunayaka) DIRECTOR GENERAL OF DC – Policy, Planning & Research CUSTOMS DC – Information & Communication Technology ADGC (C orporate) DC – Central Valuation DC – Specialized Services DC – Logistics DC – H uman Resource Management ADGC (Human DC – Human Resource Development Resource) DC – Employee Services D – Systems & Procedure Compliance Audit D – Finance DC – Appeals DC – Special Tasks & Vigilance Organization Structure of Sri Lanka Customs as at December 31, 2010 vi PART ONE Overall Performance 2012012010201 000 1 1. Introduction In the drive towards making Sri Lanka the “Wonder of Asia,” Sri Lanka Customs has a major role to play in facilitating imports and exports clearance processes to ease doing business in order to attract investors, to support speedy completion of country’s development drives, and to welcome tourism, while ensuring sufficient revenue flow to the government outlays and ensuring social safety at large by looking into socio-economic, environmental, and cultural aspects. Vision : To be recognized as a “Best Practice” Customs Administration that enhances the security and prosperity of Sri Lanka. Mission : We are committed to enforce and enhance compliance of the Customs law and related laws concerning revenue, social and environmental protection whilst facilitating legitimate trade, travel and industry with due recognition to national efforts and international Customs standards. 2. Sri Lanka Customs in the National Economy In the country’s major developmental plan in becoming the central hub in linking the East and the West, and in developing as a multifaceted five-pronged hub encompassing the areas of (1) naval, (2) aviation, (3) commercial, (4) energy and (5) knowledge, Sri Lanka Customs is one of the government organizations vital in transforming the economy. The Department is supporting the government to achieve the mid-term fiscal and economic framework targets set to contain budget deficit at 5 per cent, keep up growth rate over 8 per cent and double the per capita income over US $ 4,000 by 2014. Sri Lanka Customs, being the largest single contributor to the government revenue, performed a significant role in this regard in 2010. It helped the government to consolidate fiscal sector which in turn assisted to graduate Sri Lanka to the level of “a strong middle income country” in 2010 as listed by the International Monetary Fund (IMF). The Department is ready to be in the frontier bearing responsibility of raising Sri Lanka to the next layer of the income category through holistic approach for fiscal consolidation and to ease doing business in Sri Lanka. 2 3. Performance in the year 2010 - the year of transition The year 2010 began with a landmark transformation of the Customs Administration under the Customs Modernization Programme supported by the Fiscal Management Reform Project (FMRP) of the Ministry of Finance and Planning to refresh the employees who had been stagnated over a long period with a sense of career development, professionalism and integrity, as the first step towards ensuring more effective and efficient service for the tax payers, and thereby maximize the collection of revenue due to the State while achieving social protection goals. As a result of those steps taken in rejuvenating the work force and designing a more systematic organizational structure which was introduced under four main areas – namely, revenue generation, enforcement, trade facilitation (Corporate) and human resources development, the Sri Lanka Customs in the year 2010 showed a significant contribution in the areas of revenue collection, human resources development, social protection, infrastructure development, systems development, trade facilitation, development project facilitation and fundamental preparation for new developments of the country including the current economic environment emerging in the post-war Northern and Eastern provinces, and shipping and aviation expansions. 3.1 Performance in Revenue Collection Sri Lanka Customs is entrusted with the collection of all the taxes imposed on the international trade. Such taxes administered during the year 2010 were Import Duty, Export Duty, Import and Export Cesses and all other levies payable on imports, such as Port and Airport Development Levy (PAL), Regional Infrastructure Development Levy (RIDL), Excise (Special Provisions) Duty and Special Commodity Levy (SCL), along with Value Added Tax (VAT), Nation Building Tax (NBT), and Social Responsibility Levy (SRL). The changes introduced by the government during the year 2010 in respect of the rates and the scope of the relevant taxes administered by Sri Lanka Customs with a view to exploit the gradual rebounding of external trade for the country’s long term economic growth, produced substantial results for the revenue collection by the Department during that year. The major policy changes affecting the collection of revenue were – • Total Customs Duty waiver granted on petrol and diesel; • Reduction of tax rate on milk powder from Rs. 100 per kg to Rs. 50 per kg.; • the simplification measures introduced in June including the introduction of four band Customs Duty structure (0, 5, 15, and 30 per cent) in place of the five band structure (0, 2.5, 6, 15 and 28 per cent); • Abolition of 15 per cent Surcharge; • Reduction of tax rate on motor vehicles and certain categories of electric items and their parts, and • Simplification of the tax formulas used by Sri Lanka Customs. The significant impact of those policy changes affected the normal relationship of the imports and tax collection of the Department in 2010, as shown in Chart 1. It is noteworthy to mention here that the low tax regime introduced in June 2010 boosted tax collection by 38 3 per cent in July compared to the tax collection in June while total imports increased by 6 per cent. That was not only a short term spring, but also an impetus to continue during the remaining 5 months in 2010, increasing the monthly average tax collection (from January 2009 to June 2010) to over Rs. 37 billion from its stagnated level of Rs. 24 billion. Chart 1: Trends of Imports and Taxes during 2009 to 2010 Due to Import of Petroleum Due to Tax rate reduction Despite the growth oriented tax measures introduced including down-scaling of tax rates and the scope directly affecting the revenue generated, revenue collected in the year 2010 by Sri Lanka Customs has shown a remarkable increase of 19.4 per cent (the total collection being Rs. 380.9 billion as compared to Rs. 319 billion collected in 2009 1). This increased rate in 2010 was further important