- Finance Minister says willing to consider applications to import cigarettes
- Significant demand from expatriate community in Colombo for foreign cigarettes
- CTC holds monopoly to manufacture and sell legal cigarettes in SL
By Nishel Fernando
Sri Lanka is currently contemplating to entertain applications to allow potential importers to import foreign cigarette brands to the country, as there’s significant demand for such among expatriates in Colombo, Finance Minister Mangala Samaraweera said.
“We are yet to grant any approvals to import cigarettes to anyone. However, if someone wants the opportunity to import, they could submit an application to us and we will surely consider the request,” Samaraweera told reporters in Colombo Yesterday.
The minister pointed out that there is significant demand for foreign cigarettes among expatriate community in Colombo, particularly from Chinese nationals who largely depend cigarettes imported through informal channels.
Ceylon Tobacco PLC, a unit of British American Tobacco, currently holds the monopoly of cigarette manufacturing and sales in Sri Lanka.
“Even the Chinese embassy earlier informed me that these expats consume cigarettes in large quantities and they only smoke cigarettes originating from China and not the locally manufactured cigarettes.
“Therefore, it’s better to let cigarette imports through proper channels, which would also allow the government to earn revenue,” he said.
According to a recent research report, the government was estimated to have lost Rs.18 billion in cigarette tax revenue in 2017, as record 583 million illicit cigarettes were estimated to have been smuggled into the country in that year.
Finance Ministry Secretary Dr. R.H.S Samaratunga told Mirror Business that the government is yet to finalize a tax structure for imported cigarettes.
“It will be subjected to the present tax structure. Sometime, it might be little higher than that,” he said.
Minister Samaraweera noted that the sale of imported cigarettes will be subjected to same restrictions similar to cigarettes manufactured locally.
“Sri Lanka is a free country, and if someone who is in the right legal age wants to consume foreign branded cigarettes, they should be able to do so.
It will be up to the importer to decide from where they want to import them, which depends on the demand,” he added.
The move is likely to impact the market share of CTC, which maintains monopoly over the legal cigarette market capitalizing on import restrictions.
CTC contributed Rs.112 billion in excise taxes and other levies to the government revenue last year.
Treasury officials opined that as the majority of shares of CTC are foreign-owned, cigarette imports wouldn’t bring additional pressure to the country’s balance of payment.
They expect an importer would come forward shortly to import cigarettes targeting the Chinese expatriate community in Sri Lanka.