VAT Scam in Sri Lanka: Will a Long-Running Tax Fraud Allegation Become an International Investigation?
Colombo Wire Investigative Desk
Sri Lanka's long-running VAT fraud controversy could be heading towards a new and potentially international phase if renewed investigations establish that money allegedly obtained through fraudulent VAT claims was transferred overseas, invested in foreign properties or concealed through accounts and assets held in different jurisdictions.
For years, questions have surrounded one of Sri Lanka's most notorious VAT fraud cases. Allegations published over the years have sought to connect the scandal to individuals associated with former minister Imtiaz Bakeer Markar and members of his wider political and personal circle. However, the extent of Mr. Bakeer Markar's personal involvement, if any, remains a matter that would have to be established through a properly conducted investigation and admissible evidence.
The financial magnitude attributed to the historic VAT fraud has made the controversy particularly significant. Some reports have claimed losses running into tens of billions of rupees. One published account has alleged that the fraud cost Sri Lankan taxpayers approximately Rs. 40 billion and raised questions about whether the proceeds were subsequently moved through overseas financial channels.
Those allegations demand something more substantial than political speeches or newspaper exchanges: a transparent financial investigation capable of following the money.
From Sri Lanka to the international financial system
If investigators establish that proceeds from VAT fraud were transferred outside Sri Lanka, the matter would no longer be confined to a domestic tax investigation.
Modern financial-crime investigations routinely follow the movement of suspected illicit funds across borders. Bank accounts, property purchases, company structures, trusts, investment vehicles and beneficial ownership records can all become relevant when investigators attempt to establish where money originated and where it ultimately went.
The crucial question is therefore not simply whether a VAT fraud occurred.
The bigger question is:
Where did the money go?
If substantial sums were unlawfully obtained from Sri Lankan taxpayers and subsequently transferred overseas, investigators would need to examine the complete financial trail — from the original VAT transactions to bank accounts, intermediary companies, property acquisitions and subsequent transfers.
That could potentially require cooperation between Sri Lankan authorities and foreign financial-intelligence and law-enforcement agencies.
The Bakeer Markar connection
Imtiaz Bakeer Markar is a long-established Sri Lankan politician who has served in senior government positions and represented the Kalutara District. He later became a National List MP for the Samagi Jana Balawegaya.
His public career has also included extensive commentary on governance, democracy and the country's economic crisis.
In 2022, for example, Bakeer Markar publicly argued that Sri Lanka's democratic institutions and public-finance mechanisms needed to be protected during the economic crisis.
That public record makes the VAT allegations particularly important from an accountability perspective — but it is essential to distinguish between political association and criminal responsibility.
The fact that allegations have been published does not establish that Bakeer Markar personally committed VAT fraud.
If investigators believe there is evidence connecting him or members of his family to the proceeds, the proper course is to investigate those allegations and allow the evidence to determine responsibility.
The family question
The controversy has also generated claims concerning members of the Bakeer Markar family and whether relatives benefited directly or indirectly from wealth allegedly connected to the VAT fraud.
Imthiyaz' one son is employed by the British High Commission in Colombo, and the other one is employed at the UN Agency in Colombo
But where investigators identify a substantial unexplained disparity between legitimate income and assets, the situation can legitimately warrant further examination.
That is why any credible investigation should examine financial records rather than political reputations.
The relevant questions would include:
- What assets were acquired?
- When were they acquired?
- Who legally owns them?
- Who is the beneficial owner?
- What was the source of the purchase funds?
- Were funds transferred from Sri Lanka?
- Were intermediary companies used?
- Were taxes properly paid?
- Were declarations made where legally required?
Those questions can be answered through documentary evidence.
Overseas property trail
The most important development, if independently confirmed, would be a systematic examination of properties allegedly acquired outside Sri Lanka by individuals connected to the controversy.
Property ownership records in foreign jurisdictions can sometimes reveal the names of registered owners, companies involved in purchases, mortgage arrangements and transaction dates.
Financial investigators can then compare those records with declared income, tax returns and banking information.
If investigators find that property was acquired using funds that can be traced to fraudulent VAT claims, the case could potentially expand into allegations of money laundering, illicit enrichment or other financial offences, depending on the evidence and applicable law.
This is why the phrase "follow the money" is so important.
The role of the Bribery Commission
Sri Lanka's anti-corruption authorities have an important role in determining whether allegations involving public officials, politically exposed persons or unexplained assets warrant formal investigation.
If such evidence exists, it should be placed before the appropriate investigative authorities.
A challenge to the political class
The VAT controversy ultimately raises a larger question about Sri Lanka's political culture.
For decades, Sri Lankan taxpayers have been told that the country lacks sufficient resources for essential services, schools, hospitals, infrastructure and social welfare.
At the same time, allegations of enormous financial fraud have repeatedly emerged.
If even a fraction of the money alleged to have been lost through major tax frauds could have been recovered, the public benefit could have been substantial.
The people therefore have a legitimate right to ask:
Who benefited?
Who knew?
Who protected whom?
Where did the money go?
And, most importantly:
Can the money be recovered?
Books and speeches are not enough
Bakeer Markar has continued to write and speak publicly about Sri Lanka's political and social future. His autobiography, Mage Kathawa, was launched in 2024, while an earlier book, Sithamu, contained his published columns.
There is nothing improper about a former politician writing books or addressing the public.
But when serious allegations concerning public money remain in circulation, public commentary should be accompanied by transparency.
If there is no involvement, the clearest response is evidence.
If there are documents disproving the allegations, publish them.
If there are bank records demonstrating that alleged overseas transactions did not occur, produce them.
If investigators determine that the allegations are unfounded, that finding should be reported equally prominently.
Time for an evidence-based investigation
The Sri Lankan public does not need another political shouting match.
It needs an evidence-based investigation.
VAT fraud resulted in losses of the magnitude alleged, investigators should determine precisely how much was lost, identify every person legally responsible, trace the proceeds and pursue recovery wherever the money may have gone.
Foreign jurisdictions are involved; Sri Lanka should use the appropriate international legal and financial-cooperation mechanisms.
The evidence clears individuals who have been publicly accused; they too deserve that finding.
But if investigators establish that public money was stolen and transferred abroad, those responsible should face the consequences under the law — regardless of political status, family background, former ministerial position or international connections.
The VAT controversy should therefore no longer be treated merely as an old political scandal.
It should be treated as a financial-investigation question.
Sri Lankan taxpayers deserve to know how much money was lost, who benefited, where the money went and whether it can still be recovered.
And if the evidence leads beyond Sri Lanka's borders, there is no reason why the investigation should stop at the airport.
The money trail should be followed wherever it leads.