Tea brokers call on IRD to speed up VAT/SVAT registrations of factories

• Asserts need to complete registrations before this week’s auction
• First auction of 2024 was pushed off to enable tea producers to register
• Internal issues at IRD led to registration delays
• Last week’s auction saw price differences for invoices from factories without SVAT certification

Tea Brokers called on the Inland Revenue Department (IRD) to step up efforts and accelerate the registrations of tea factories by this week so that the Colombo Tea Auction can function without any impacts.
While noting that regional officers of IRD are under tremendous pressure and are working long hours to help overcome the backlog, Asia Siyaka Commodities noted more resources will be needed.

“It is critical that registrations are complete before the next auction which was initially to be held on 9 and 10 January but has been pushed back to 10 and 11 to accommodate late registrations by tea producers,” the tea broker said in its latest tea report. 
The Regional Plantation Companies (RPCs) are all certified, but the greater volume of private tea factories scattered through all growing regions are seeking registrations from the IRD’s regional centres, Asia Siyaka Commodities said.

The Colombo Tea Traders’ Association’s working groups have been driving change in documentation, auction By-laws, reporting procedures and most importantly the Digital Trading Platform to ensure minimal disruption to the world’s primary auction centre for the sale of Orthodox Black Tea.
The first tea auction for 2024 was held on 4 and 5 January, instead of 2 and 3 January as originally planned. The auction was pushed off to enable tea producers to register for VAT/SVAT. Registrations were initially delayed due to internal issues at IRD. 

“Even now many sellers are operating on temporary documents pending full registration for SVAT,” Asia Siyaka Commodities said.
The Colombo Tea Traders Association (CTTA) urged the Sri Lanka Tea Board (SLTB) to intervene to enable and ensure registration. The move did add a level of comfort to buyers, who ultimately participated in the auction, resulting in a positive impact on prices. 

Increasing registration by sellers in the days leading up to and during the auction did encourage some buyers to bid actively even though initially there was a strong reluctance to do so.
Buyer exporters who account for almost 90 percent of teas sold at the auction are already SVAT-certified and preferred to purchase teas from producers who are similarly certified. 
Buyers operating for the domestic market, particularly in the dust catalogs reduced their price offers at the auction to reflect the VAT component that would be added to their purchase price. In many instances, these buyers operate for the better teas and pay a significant premium.

Further, the absence of an auction during the traditional holiday break in the last week of the year, added pent-up demand from exporters who had to finalise incomplete orders. Brisk bidding helped keep prices buoyant for a large cross-section of teas from all elevations and product categories. 
Some buyers, however, were selective in their purchases, and price differences were noticeable for invoices that came from factories without SVAT certification.