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TEA shocked by 18 percent tax on vital export earner

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The Tea Exporters Association (TEA) sounded an alarm in response to the impending 18 percent Value Added Tax (VAT) set to hit the tea industry from 01 January 2024.

Issuing a press release, TEA expressed serious concerns and highlighted potential disruptions to the entire tea value chain, unless a smooth operational mechanism is promptly established.

IT said: The TEA acknowledges the necessity to broaden the tax net and introduce VAT to stabilise the country’s finances. However, the Association is deeply worried about the repercussions of imposing an 18 percent VAT on a commodity primarily destined for over 90 percent export, requiring a full VAT refund to stay competitive globally. This move has raised red flags within the industry.

“”While it is understood that in order to resurrect the country’s financial stability, we have to widen the tax net and the VAT, the high VAT on a commodity, of which over 90 percent is produced and sold purely for exports, wherein all of the VAT will need to be refunded to stay competitive in the world market, the imposition of the VAT on tea has caused grave concern amongst the tea industry stakeholder,” it said.

Urging swift action, the TEA has called upon the Finance Ministry and Inland Revenue Department (IRD) to swiftly register all tea manufacturers for VAT. The Association stressed the unique nature of the tea sector, requesting special attention from the IRD. They highlighted the need for comprehensive stakeholder consultations before implementing such substantial changes, aiming to sustain the industry amid challenging global conditions.

With over 400,000 tea smallholder farmers contributing to 70 percent of tea production, 21 regional plantation companies, around 600 tea manufacturers, and more than 300 tea exporters/buyers, the tea industry’s complex network involves eight brokers conducting weekly tea auctions. However, the imminent VAT implementation poses a significant shift, requiring all 600 tea factories to register for VAT and Simplified Value Added Tax (SVAT), potentially leading to administrative hurdles and added costs.

“The last tea auction of the year concluded on December 19, 2023 and the next tea auction is scheduled for January 3, 2024. The exporters are sceptical about the ability of the tea factories getting the VAT/SVAT registration before January 1 and the fate of the first tea auction of 2024. The tea manufacturers, who are unable to get the VAT registration by January 1, will not be able to issue VAT invoices and may have to keep away from the auctions until the registrations are completed. This may have multiple effects on the tea exports, income of smallholder farmers, etc. Even foreign buyers may keep away from the tea auction temporarily, which could affect the tea prices,” the TEA statement said.

Expressing industry concerns, the TEA highlighted the potential disruption of upcoming tea auctions, impacting payments to farmers, tea exports, and the participation of foreign buyers, thus affecting tea prices.

Additionally, while the government’s gazette notification includes green leaves under VAT, the tea industry seeks assurance that this fundamental agricultural raw material might be exempt from VAT payments.

In summary, the TEA is advocating for thorough consultation, extended registration timelines, and an alternative system to ensure minimal disruption to the established tea value chain. Their primary objective remains the protection of the industry’s stability and competitiveness in the global market.



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CEB engineers raise alarm over power sector stability

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A senior electrical engineers attached to the Ceylon Electricity Board (CEB) have warned that unresolved structural and policy issues within the power sector could threaten the long-term stability of the national grid, urging authorities to act swiftly to address mounting technical and administrative concerns.

Speaking on condition of anonymity, they said the electricity network was operating under increasing strain due to delayed infrastructure upgrades, financial constraints, and growing demand.

“The national grid is not something that can be managed casually. It requires systematic planning, preventive maintenance, and timely investment. If these are compromised, the risk to system stability increases,” the engineers said.

They noted that several transmission and substation modernisation projects were behind schedule, while ageing thermal plants continued to shoulder a significant portion of the country’s base load demand.

“Engineers are committed to ensuring an uninterrupted supply. But professional expertise must be respected in decision-making. Technical matters cannot be subjected to short-term political considerations,” the engineers added.

Meanwhile, the powerful Ceylon Electricity Board Engineers’ Union (CEBEU) echoed similar concerns, warning that failure to address long standing professional and structural issues could have serious consequences for the power sector.

In a statement, the CEBEU has said that engineers have repeatedly called for reforms that safeguard the integrity of the utility and ensure that operational decisions remain grounded in technical evaluation.

“The electricity sector is a critical national asset. Any attempt to weaken institutional safeguards or bypass professional consultation will directly impact service reliability and long-term sustainability,” the union said.

The CEBEU has stressed the importance of transparent engagement between policymakers and technical personnel, noting that morale among engineers could be affected if their concerns continue to go unheard.

Industry analysts point out that the power sector plays a central role in Sri Lanka’s economic recovery efforts, particularly as the country seeks to expand industrial activity and attract investment. Stability in electricity supply remains a key determinant of business confidence.

The senior engineer stressed d that the objective of raising concerns is not confrontation but preservation of the grid’s integrity.

“Our responsibility is to the public. Electricity powers hospitals, industries, and homes. Safeguarding the system is a national duty,” he said.

With tensions simmering within the sector, stakeholders say meaningful dialogue between authorities, engineers, and trade unions will be crucial in ensuring that Sri Lanka’s power infrastructure remains resilient in the face of growing challenges.

By Ifham Nizam

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CB identifies 24 pyramid scams in Sri Lanka

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The Central Bank (CBSL) yesterday announced that investigations had identified 24 companies and applications operating prohibited pyramid schemes.

In a public notice issued under Section 83C of the Banking Act, No. 30 of 1988 (as amended), the CBSL said the following entities had been “ascertained and determined as prohibited schemes”: Tiens Lanka Health Care (Pvt) Ltd, Best Life International (Pvt) Ltd, Mark–Wo International (Pvt) Ltd, V M L International (Pvt) Ltd, Global Lifestyle Lanka (Pvt) Ltd, Fast3Cycle International (Pvt) Ltd, Sport Chain App / Sport Chain ZS Society Sri Lanka, OnmaxDT, MTFE App / MTFE SL Group / MTFE Success Lanka / MTFE DSCC Group, Fastwin (Pvt) Ltd, Fruugo Online App / Fruugo Online (Pvt) Ltd, Ride to Three Freedom (Pvt) Ltd, Qnet / Questnet, Era Miracle (Pvt) Ltd and Genesis Business School, Ledger Block, Isimaga International (Pvt) Ltd, Beecoin App and Sunbird Foundation, Windex Trading, The Enrich Life (Pvt) Ltd, Smart Win Entrepreneur (Pvt) Ltd, Net Fore International (Pvt) Ltd / Netrrix, Pro Care (Pvt) Ltd and Shade of Procare (Pvt) Ltd, SGO / sgomine.com and I.C.A.N Advertising (Pvt) Ltd and its affiliates icanonlineadvertising.com, bannercuts.com, bannercuts.lk, bannercuts.net and bannercuts.org

The CBSL said pyramid schemes, also referred to as multi-level marketing or direct selling schemes in certain instances, operate as recruitment-based programmes in which members enlist others into an expanding “downline” structure resembling a chain letter.

Under such arrangements, a portion of the fees paid by new recruits is channelled upwards to earlier participants, known as the “upline”, who are fewer in number.

The Central Bank warned that such schemes are inherently unsustainable, with the vast majority of participants at the lower tiers eventually losing their investments, while only a small number of early entrants are able to recover or profit from the funds contributed by subsequent recruits. It noted that when a pyramid scheme collapses, up to 99 per cent of those in the lower levels risk losing their money.

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Church urges patience, warns against interference with Easter attacks probe

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Director of Communications for the Archdiocese of Colombo, Rev. Fr. Cyril Gamini Fernando, yesterday expressed confidence that ongoing investigations into the 2019 Easter Sunday terror attacks would yield meaningful results and urged the public and all stakeholders to exercise patience and allow the probe to proceed independently.

Addressing a media briefing in Colombo yesterday, Fr. Fernando called on all parties to refrain from interfering with the investigations, warning that any attempt to obstruct the process would amount to a grave injustice to the victims.

He said he believed there was credible evidence to warrant the arrest of military intelligence veteran Maj. Gen. (Retd.) Suresh Sallay.

Referring to the coordinated bombings on April 21, 2019, which targeted churches and hotels and claimed nearly 300 lives, Fr. Fernando described the attacks as a “barbaric” act and a “massacre” that killed worshippers attending Easter services as well as individuals from different religious and ethnic communities.

By Norman Palihawadane

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