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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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Gul, Kharote spin Afghanistan to victory over Japan in Asian Games opener

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(File pic) Arab Gul took 4 for 8 in the opening match of the men's cricket competition ( Cricinfo)

Right-arm wristspinner Arab Gul,  took 4 for 8 on T20I debut and left-arm spinner Nangeyalia Kharote  picked up 3 for 19 as Afghanistan successfully defended a modest 129  against Japan   to open their Asian Games men’s competition  campaign with two points in Group A.

Two days after nearly beating India  in a rain-shortened game in Sano, hosts Japan made a steady start to the chase and reached 53 for 2 in the eighth over before losing their way.

Gul did much of the damage, taking two wickets apiece in the 12th and 14th overs as Japan slid from 60 for 4 to 63 for 8. Abdollah Ahmadzai and Kharote then finished off the lower order, with Japan bowled out for 81 in 19.3 overs.

Asked to bat first, Afghanistan had posted 129 for 6, with Mohammad Akram making 34, captain Darwish Rasooli 29 and Karim Janat 21.

But it was Mohammad Ishaq’s unbeaten 25 off 17 balls from No. 6 that provided the late impetus after Japan had kept Afghanistan to under six an over for the first 15 overs. Right-arm seamer Shoma Sugaya-Slater and offspinner Ibrahim Takahashi took two wickets apiece for Japan.

The two sides have games against Nepal lined up in Group A. The top two teams from the group will proceed to the quarter-finals.

Scores:

Afghanistan 129 for 6 in 20 overs  (Mohhamad Akram 34, Karim Janat 21, Darwish Rasooli 29,  Mohammad Ishaq 25*; Reo Sakurano Thomas 1-05,  Shoma Sugaya-Slater 2-18, Ibrahim  Takanashi 2-19) beat Japan 81  in 19.3 overs (Reo Sakurano- Thomas 23, Kendel Kadowwaki Fleming 14, Benjamin Ito Davis 17; Arab Gul 4-8, Abdullah Ahmadzai 2-13, Nangeyalia Khan 3-19, Najibullah Zadran 1-07 ) by 48 runs

(Cricinfo)

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BASL calls for conscience vote on 22nd Amendment

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The Bar Association of Sri Lanka (BASL) yesterday called on all political parties, represented in Parliament, to allow their members to vote on the proposed 22nd Amendment to the Constitution according to their conscience, stressing that the responsibility for deciding whether the Bill should be enacted now rests with Parliament.

In a statement issued after the Supreme Court’s determination on the 22nd Amendment Bill, BASL President Rajeev Amarasuriya and General Secretary Nalin de Silva have said the SC’s determination should not be interpreted as an endorsement of the proposed constitutional amendment as a matter of policy.

The BASL has said the SC’s jurisdiction, under Articles 120, 121 and 123 of the Constitution, was to determine the constitutional requirements for the enactment of the Bill, including whether the Bill, or any of its provisions, required approval at a referendum under Article 83.

“The determination is therefore not a determination as to whether the proposed amendment is good or bad policy, desirable or undesirable, wise or unwise, or whether Parliament ought to enact it,” the BASL said.

Full text of the BASL statement: The Supreme Court has now delivered its Determination on the Twenty-Second Amendment to the Constitution Bill and determined that the Bill does not require the approval of the People at a Referendum.

In terms of Articles 120, 121 and 123 of the Constitution, the jurisdiction of the Supreme Court in relation to the Bill is to determine the constitutional requirements for its enactment, including importantly whether the Bill, or any provision thereof, requires the approval of the People at a Referendum by virtue of Article 83.

The Determination is therefore not a determination as to whether the proposed Amendment is good or bad policy, desirable or undesirable, wise or unwise, or whether Parliament ought to enact it.

This distinction is also evident from Sri Lanka’s previous constitutional amendments. During the 48 year history of the second republican Constitution there have been many amendments which passed constitutional muster but nevertheless had a negative effect on democracy, constitutionalism, the independence of the judiciary and the rule of law.

The question that now arises is whether Parliament ought to enact the proposed Amendment. That responsibility rests with Parliament and with each individual Member of Parliament when they vote on the Bill.

In making that decision, Members of Parliament should be mindful of the possible and probable consequences the 22nd Amendment will have on our nation. They should also consider the lack of transparency and a proper consultative process in the introduction of the 22nd Amendment. As representatives of the people they should also consider the concerns that have been expressed in relation to the proposed Amendment by a broad cross-section of society including the Maha Nayakes of the Three Nikayas, the Catholic Bishops’ Conference in Sri Lanka, the Church of Ceylon, the Bar Association of Sri Lanka, the Judicial Service Association, the Commonwealth Lawyers Association, LAWASIA, the International Association of Judges, the United Nations Special Rapporteur on the Independence of Judges and Lawyers, the French National Bar Council, and more than 40 Professional Associations and Unions, including the Government Medical Officers’ Association and other leading professional bodies.

Accordingly, the Bar Association of Sri Lanka calls upon all the political parties in Parliament to allow the Members of Parliament to speak and vote on the 22nd Amendment according to their conscience.

The responsibility now lies with Members of Parliament, when called upon to vote, to take a principled position according to their conscience giving due consideration to their constitutional responsibility, their representative capacity and most importantly their duty to the sovereign People of Sri Lanka.

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IMF: Sri Lanka on course for 2027 market return

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SL to regain access to international financial and capital markets next year in line with IMF projections

Sri Lanka is on course to regain access to international financial and capital markets around 2027, in line with the International Monetary Fund’s (IMF) current economic projections, IMF Mission Chief Evan Papageorgiou said yesterday.

Papageorgiou said the IMF’s core assumptions under Sri Lanka’s economic programme continued to envisage the country returning to international capital markets in 2027.

“Our previous assumption that Sri Lanka will go back to capital markets still stands. We still have a good trajectory to achieving this in 2027 or thereabouts, and that should be the goal,” he said.

Papageorgiou stressed that Sri Lanka could not rely solely on domestic sources of financing to build long-term economic resilience and would need a diversified funding strategy.

“Every country needs to have a good ability to access funds both in domestic markets, as it already has, as well as international markets for eurobonds and other modes,” he said.

He said a return to international capital markets would have significant implications for Sri Lanka’s external debt composition, while strengthening foreign exchange reserves would remain essential as the country prepares to meet future debt-servicing obligations.

The IMF’s assessment comes amid improving international investor sentiment towards Sri Lanka and positive developments in the country’s sovereign credit ratings.

Papageorgiou cited Fitch’s recent upgrade of Sri Lanka’s credit rating as a positive development, saying global investors were increasingly viewing the country from a more constructive perspective.

Sri Lanka remains under the IMF’s Extended Fund Facility (EFF) programme, which is scheduled to continue until March 20, 2027. Regaining access to international capital markets remains a key milestone under the country’s broader economic recovery.

The IMF has stressed the importance of rebuilding Sri Lanka’s foreign exchange buffers and maintaining stability in domestic financial markets as the country approaches substantial external debt repayments.

A sustained improvement in these areas would help strengthen the country’s capacity to return to international markets while safeguarding macroeconomic stability, the IMF has indicated.

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