'Don't drive away what's helping consumers', Advocata pushes for checkout tax reform

Thousands of parcels ordered by Sri Lankans from popular e-commerce platforms like TEMU, AliExpress, and eBay are now stuck at customs, caught in a legal grey zone that’s choking the flow of goods. Advocata Institute warns ensuring consumer choice through a competitive market is key to delivering reasonable prices and better quality for Sri Lankans.

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Without a modern legal framework enabling e-commerce platforms to collect taxes at the point of sale, the country faces worsening customs delays, supply chain bottlenecks for small businesses, and the loss of millions in potential government revenue, disrupting consumer choice. Sri Lanka's already complicated tariff system only compounds the problem, making it harder for importers and customs officials alike to navigate duties and clearances efficiently.

Until June, incoming parcels were taxed under an informal “per kilo” system, where agents declared goods as personal effects and paid a flat fee. This unofficial arrangement was manageable until a surge in cross-border shipments, driven by platforms like TEMU, AliExpress and eBay, overwhelmed the system.

In response, customs scrapped the workaround informing the public that they are now using the “correct” instrument. Tax is now levied at the level of individual items. Every parcel’s contents must be individually declared by HS Code to customs. At current volumes, this is impossible.