- Immigration Dept. advised to revise legislation
Sri Lanka’s online visa system has come under fire after a new audit revealed serious flaws in how it was implemented.
The Auditor General’s Department, in a special report, has called for the Government to assess and recover the losses caused by the project and to hold those responsible to account.
The report also urges that any future e-visa system be awarded through a fair and transparent process.
In its latest Special Audit Report on the Online Visa Issuance Methodology of the Department of Immigration and Emigration, the Auditor General’s Department has recommended that the Government take immediate steps to assess the losses and revenue shortfalls incurred as a result of implementing the new visa project.
The report further advises that any such losses should be recovered from those responsible for the project’s design and execution.
The Auditor General has also emphasised the need for a transparent and competitive bidding process when selecting a service provider for a future e-visa system. This, however, is to be carried out in accordance with the final decisions of the case currently pending before the Supreme Court.
During the brief period in which GBS Technology Services and IVS Global FZCO, VF Worldwide Holdings Ltd. operated the visa issuance system, the company VFS Global had reportedly recovered an 18% fee and a 2.5% Social Security Contribution Levy (SSCL) from visa applicants on behalf of the Sri Lankan Government.
The report calls on relevant authorities to ensure that income tax on this revenue is properly calculated and remitted to the Inland Revenue Department (IRD).
The audit further recommends that a comprehensive investigation be conducted into the actions of officers who participated in drafting Cabinet papers, appointing committees, evaluating reports, and authorising operational procedures, particularly in instances where visa revenue was allowed to be collected in foreign bank accounts without proper approval.
The report suggests that appropriate disciplinary and other actions be taken against any individuals found to have neglected their official responsibilities.
The Auditor General has noted that the report was prepared within the limits of the department’s statutory powers, resources, and available information. As such, it does not include examinations of possible illegal or criminal activities, which fall beyond the department’s mandate. Should such investigations be required, the report recommends that specialised law enforcement or regulatory bodies be enlisted to carry them out.
Online visa system timeline
The Department of Immigration and Emigration, established under the Immigrants and Emigrants Act No.20 of 1948, began operations in November 1949 with visa issuance as one of its main functions.
In 2012, Sri Lanka introduced its first online visa system known as the Electronic Travel Authorisation (ETA), becoming the first country in South Asia to adopt such a system, following examples set by countries like Australia.
The system, implemented through Mobitel Ltd., allowed foreign nationals to apply for visas online without any service fees. It functioned effectively from 2012 to 2018, simplifying the visa process and modernising Sri Lanka’s border entry management.
Around 2018, authorities recognised the need to further enhance the system to meet modern security and efficiency standards. In 2021, the Cabinet approved a proposal to revamp the ETA system under the department’s control to strengthen national security, though implementation was delayed until 2024.
Meanwhile, in January 2020, Cabinet approval was granted to appoint authorised agents to handle visa applications for certain countries, leading to Travelzen International Travel Services (Shanghai) Ltd. being authorised in September 2023 to process ETA applications for Chinese nationals.
Later in 2023, a detailed proposal for developing online visas as well as consular, biometric, and tourism promotion services was submitted by IVS-GBS in partnership with VFS Global. This proposal was approved by the Cabinet in December 2023, and an agreement was signed on 21 December 2023.
As a result, visa issuance was managed by GBS Technology Services and IVS Global FZCO, VF Worldwide Holdings from 17 April to 2 August 2024. However, due to significant delays and public complaints — particularly regarding visa processing at the Bandaranaike International Airport — the electronic system was suspended on 1 May 2024 and only on-arrival visas were temporarily issued.
Subsequently, the Supreme Court, through interim injunctions in August 2024, ordered the suspension of the new system and the reimplementation of the previous Mobitel-managed online visa system.
Irregular transfer of State revenue
In the audit report, the National Audit Office (NAO) has raised serious concerns over the transfer of State revenue collection powers in Sri Lanka’s immigration sector to a private foreign company, calling the move a violation of established financial and administrative regulations.
According to the NAO report, the authority to collect State revenue related to immigration and emigration has been legally vested in the Controller General of Immigration and Emigration.
However, under the controversial e-visa agreement, this power was improperly delegated to GBS Technology Services and IVS Global FZCO, VF Worldwide Holdings Ltd., allowing visa fees to be collected via a bank account and payment gateway located outside Sri Lanka. The audit notes that no legal provision exists to delegate such powers to private agents beyond the State’s control.
The report also found that, contrary to Treasury guidelines requiring visa fees to be credited to the department’s official account the following day, the agreement permitted a delay of up to seven days. During the company’s short period of operation, visa fees were withheld in foreign accounts for between one and six days, resulting in potential losses to State revenue.
The NAO also observed that the $ 500,000 security deposit required under the contract was insufficient compared to the actual visa fee revenue of $ 952,860 earned by the company as of 29 April 2024.
The audit has also identified discrepancies between the number of visa applications reported by the company and those recorded in the department’s system. Between April and August 2024, the company reported 373,991 applications, while department records showed 375,004 visas issued — a difference of 1,013 applicants whose fees were not remitted to the Government.
The report further highlights that the company, not the department, determined the visa fees charged and collected them directly into a foreign account in Dubai before transferring the revenue to the department’s account in Sri Lanka. This practice, the report notes, occurred without authorisation from the Treasury or the Central Bank, raising questions about transparency and compliance.
The audit also criticises the lack of internal monitoring mechanisms within the Department of Immigration and Emigration to ensure proper revenue collection, as required under Section 127(1)(b) of the Financial Regulations. Unlike the previous ETA system managed through Mobitel, where daily reports were shared with the Accounts Division, no such verification system existed under the new arrangement.
The NAO further observes that if outsourcing had been genuinely required, the department should have formed an expert committee to identify the scope of services and invited competitive bids through an Expression of Interest (EOI) process. Instead, the project was launched based on an unsolicited proposal, bypassing proper procurement procedures.
The report also reveals that the Controller General of Immigration and Emigration had previously warned that the proposed system would undermine the department’s authority and could create difficulties for foreigners applying for visas.
Despite these concerns, the Secretary to the Ministry of Public Security proceeded with the proposal, disregarding key recommendations from the Controller General and the Ministry of Finance’s own observations, which had flagged the same procedural and legal issues in September 2023.
Calls for legal reforms
The NAO has also recommended that the Department of Immigration and Emigration review and, if necessary, amend the Immigrants and Emigrants Act No.20 of 1948 to clearly define the legal provisions governing the visa issuance process.
According to the report, the department has a duty to provide efficient, customer-friendly services that keep pace with technological advancements and must continue improving its systems to meet modern standards.
The NAO further emphasised that any outsourcing of immigration services should be preceded by a cost-effectiveness study and carried out through a transparent tender process, allowing fair competition among all eligible parties. Such procedures, the report notes, would help ensure that contracts are awarded under conditions that are financially beneficial to the Government and advantageous to the country.
In addition, the audit highlights the importance of verifying the legitimacy and regulatory compliance of both local and foreign service providers before signing agreements. The NAO recommends that the department ensure that all service providers operate within Sri Lankan tax, legal, and regulatory frameworks, and that all fees and revenues collected on behalf of the Government are handled transparently.