Apparel exporters fear over US$1 bn loss as SVAT abolition looms

Sri Lanka’s apparel exporters are expressing serious concerns that the impending abolition of the Simplified Value Added Tax (SVAT) system could lead to a significant downturn in their export earnings, potentially exceeding US$1 billion.

- NISHEL FERNANDO

This apprehension stems from the anticipated increase in finance costs associated with exports under the proposed new system.

The Inland Revenue Department (IRD) is currently in the final stages of developing a risk-based refund system, which is slated to replace the existing SVAT system starting in October this year. According to the IRD, the new system is 77 percent complete and on track for its October 1st launch.

However, the Joint Apparel Association Forum (JAAF) voiced strong reservations about the proposed new system during the 25th Exporters’ Forum held at the Export Development Board (EDB) premises in Colombo on Monday.

“Even if all export companies in the sector are categorised as lower or medium risk and receive refunds within 45 days, the interest cost to the industry will amount to Rs. 212 million per month, or Rs. 2.6 billion annually,” said Yohan Lawrence, Secretary-General of JAAF.