Sri Lanka’s exporters yesterday expressed their appreciation to Finance and Mass Media Minister Mangala Samaraweera for deciding to continue with the current Simplified Value Added Tax (SVAT) despite the plans of his predecessor to the contrary.
The Exporters Association of Sri Lanka (EASL) in a statement said, prior to the implementation of the SVAT system, exporters experienced serious difficulties including cash flow issues, which constrained in multiple ways, their capacity to trade, and compromised their ability to perform
“Since 2016, when the sudden proposal to abolish SVAT was announced, the EASL, along with other export industry stakeholders, made collective representation to the government at the highest level, to articulate the importance to continue with the SVAT system,” an EASL statement said.
The Finance Ministry in a short statement this week admitted that the Inland Revenue Department was not ready to abolish SVAT system without inconveniencing exporters and disturbing their cash flows.
“Exporters are convinced that the current SVAT scheme works seamlessly, efficiently and contributes to significantly reduce the cost of doing business for both direct and indirect exporters,” EAST statement added.
Former Finance Minister and recently resigned Foreign Minister Ravi Karunanayke proposed to abolish SVAT system with effect from January 1, 2017,
but was postponed to April 1, 2017 subsequent to meetings the private sector has with Prime Minister Ranil Wickremesinghe.
Exporters were pushing for the SVAT scheme to be retained until the electronic tax portal (RAMIS), which can instantaneously process taxes, becomes reliably operational, since claiming VAT refunds under the normal scheme causes delays, which in turn threatens company cash flows.
However, the RAMIS system to-date remains not fully operational.