The special audit report on Sri Lanka’s controversial e-Visa contract has revealed that service providers linked to the project failed to remit more than USD 1.4 million in due taxes to the Inland Revenue Department.

According to the report, GBS Technology Services & IVS Global-FZCO, operating under VFS VF Worldwide Holdings Ltd, had collected both the 2.5 percent Social Security Contribution Levy and 18 percent Value Added Tax from visa applicants between April and August 2024.

However, the amounts — estimated at USD 172,970 in SSCL and USD 1,245,390 in VAT — were not paid to the government, resulting in a total tax loss of USD 1,418,360.

The report notes that the companies handled 373,991 visa applications during this period, generating at least USD 6.9 million in service-fee revenue.

It further found that the firms earned an additional USD 1.8 million from visa-fee-waiver countries where tourists were exempt from paying visa fees but were still charged service fees — revenue that would not have been generated under the previous Electronic Travel Authorization (ETA) system.

In addition to the visa fee charged by the Department, the audit highlighted that all visa applicants — including those eligible for exemptions — were required to pay a service fee of USD 18.50 under the new system. Under the previous ETA arrangement, no such service fee was applied, and the approved improvement proposal had suggested a nominal charge of only USD 1. The audit questioned how the steep increase in service fees could be justified, especially for tourist and business visa categories meant to encourage arrivals.

The failure to remit taxes was among several irregularities identified in the special audit report, which pointed to major procedural lapses, revenue losses, and a lack of transparency in awarding and implementing the e-Visa project.

The Supreme Court last year issued an interim order temporarily suspending the Cabinet decision to outsource the visa application process to the consortium led by VFS VF Worldwide Holdings Ltd pending further hearing. (Newswire)

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