The National Chamber of Exporters (NCE) is calling on the Sri Lankan government to reconsider its decision to abolish the Simplified Value Added Tax (SVAT) by the end of October.
The NCE argues that this move will place undue pressure on exporters, who are already grappling with a challenging economic environment.
NCE President Indhra Kaushal Rajapaksa emphasised that while the export community is not seeking indefinite protection, the current economic climate, marked by rising energy and logistics costs, global trade uncertainty, and domestic inflation, makes this a particularly inopportune time to dismantle SVAT.
The NCE highlights the benefits of SVAT, which eliminates the need for upfront VAT payments, thereby easing cash flow constraints and avoiding lengthy delays in claiming refunds.
“The export community is not asking for indefinite protection,” emphasised Rajapaksa.
“But we are pleading with the government not to dismantle SVAT this year. Exporters are already under pressure from rising energy and logistics costs, global trade uncertainty, and domestic inflation. Now is not the time to weaken a sector that brings in vital foreign exchange.
"Exporters remember the pre-SVAT era all too well: refund delays stretching for months, cumbersome paperwork, and debilitating cash flow gaps. Many businesses were forced to borrow at high interest rates just to survive. The NCE warns that a return to such conditions without a fully functional, integrated, and tested VAT refund system would be a severe policy misstep."
Many businesses, the NCE points out, were previously forced to borrow at high interest rates to stay afloat.
“We are not against reform,” said Shiham Marikar, Secretary General and CEO of the NCE.
“But reform must be smart, gradual, and data-driven. To date, there has been no transparent evidence presented to justify the claim that SVAT is being widely misused. Even the Inland Revenue Department has admitted that SVAT’s removal will not significantly improve tax revenue. So why the haste?”
While the government contends that the removal of SVAT aligns with recommendations from the International Monetary Fund (IMF), and broader fiscal reforms, the NCE cautions against the uncritical application of global templates to local conditions.
The chamber notes that developed economies typically process VAT refunds within 30 days through fully digitised systems.
The NCE is urging the government to delay any action on SVAT removal, emphasising the need for a fully functional, integrated, and tested VAT refund system.
The NCE argues that this move will place undue pressure on exporters, who are already grappling with a challenging economic environment.
NCE President Indhra Kaushal Rajapaksa emphasised that while the export community is not seeking indefinite protection, the current economic climate, marked by rising energy and logistics costs, global trade uncertainty, and domestic inflation, makes this a particularly inopportune time to dismantle SVAT.
The NCE highlights the benefits of SVAT, which eliminates the need for upfront VAT payments, thereby easing cash flow constraints and avoiding lengthy delays in claiming refunds.
“The export community is not asking for indefinite protection,” emphasised Rajapaksa.
“But we are pleading with the government not to dismantle SVAT this year. Exporters are already under pressure from rising energy and logistics costs, global trade uncertainty, and domestic inflation. Now is not the time to weaken a sector that brings in vital foreign exchange.
"Exporters remember the pre-SVAT era all too well: refund delays stretching for months, cumbersome paperwork, and debilitating cash flow gaps. Many businesses were forced to borrow at high interest rates just to survive. The NCE warns that a return to such conditions without a fully functional, integrated, and tested VAT refund system would be a severe policy misstep."
Many businesses, the NCE points out, were previously forced to borrow at high interest rates to stay afloat.
“We are not against reform,” said Shiham Marikar, Secretary General and CEO of the NCE.
“But reform must be smart, gradual, and data-driven. To date, there has been no transparent evidence presented to justify the claim that SVAT is being widely misused. Even the Inland Revenue Department has admitted that SVAT’s removal will not significantly improve tax revenue. So why the haste?”
While the government contends that the removal of SVAT aligns with recommendations from the International Monetary Fund (IMF), and broader fiscal reforms, the NCE cautions against the uncritical application of global templates to local conditions.
The chamber notes that developed economies typically process VAT refunds within 30 days through fully digitised systems.
The NCE is urging the government to delay any action on SVAT removal, emphasising the need for a fully functional, integrated, and tested VAT refund system.
