Shippers' Council sees SVAT abolition diverting FDI away from Sri Lanka

Says SVAT abolition could divert critical investment to competing countries with greater certainty

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• Warns upfront VAT payments and refund delays could cripple exporter cash flows and disrupt operations

• Notes SMEs in textiles, garments, and food processing most vulnerable to policy shift

• Says refund uncertainty deepens mistrust between businesses and State, undermining long-term planning

• Urges Govt. to modernise SVAT through digital tools instead of abolishing it outright; recommends improving VAT administration, broadening tax base, and tackling tax evasion

SRI Lanka Shippers' Council (SLSC) yesterday urged the Government to urgently reconsider the abolition of the Simplified Value Added Tax (SVAT) scheme as it would erode export competitiveness and investor confidence, deepen the mistrust between businesses and the State and threaten supply chains and livelihoods.

"While we commend the ongoing efforts to reform and modernise our taxation policies, it is imperative to carefully evaluate the unintended consequences that this change will impose on our exporters, the broader investment climate, and the national economy," SLSC Chairman Trisherman Frink said.

At a juncture when Sri Lanka is intensifying efforts to attract foreign direct investment (FDI), policy predictability and stability are paramount. International investors assess the ease and reliability of business environments, favouring jurisdictions with efficient, investor-friendly tax frameworks.

A system that immobilises vital working capital through prolonged refund cycles places Sri Lanka at a distinct disadvantage compared to regional peers, many of who maintain supportive export incentives.