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Taxation increase counter-productive to increasing exports, competitiveness – JAAF

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3 years ago

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‘Rebuilding Sri Lanka is a national priority and the government of Sri Lanka has aptly stated that the path to rebuilding the nation is in strengthening export-led growth. Sri Lanka’s merchandise exports currently are approximately USD 12 Bn annually, although the country really needs to notch exports closer to USD 20 Bn per annum to take the quantum leap into becoming a developed nation.

‘This will be particularly challenging given the contraction in Sri Lanka’s export markets. While apparel showcased commendable growth in the first eight months of 2022, the industry is now seeing a considerable decline in orders due to a range of global factors, a pattern which may continue indefinitely. Hence, looking at the paradigms unfolding globally, it is imperative that Sri Lanka remains competitive and offers potential and existing investors a competitive investor environment, the Joint Apparel Association Forum (JAAF) said in a press release.

Extracts from the release: ‘JAAF is deeply concerned by recent discussions for the removal of the concessionary rate granted to exporters, replacing this with a single rate of corporate taxation. This would mean the rate of corporate taxation doubling for exporters. The industry has been contributing 52 per cent to export revenue continually throughout the crisis, a contribution that is critical to keep the economy afloat, despite challenging internal and external factors. An additional rate of taxation will make the apparel industry very uncompetitive when compared with regional peers.

‘Until September 2022, apparel exporters were liable to pay a concessionary corporate income tax rate of 15 per cent (which was previously 14 per cent). However, aligned with the IMF staff-level agreement, the government tabled proposals in the 2022 interim budget to increase the standard corporate income tax rate to 30 per cent from 24 per cent, effective from the 1st of October 2022. JAAF is disturbed by this proposed increase as the apparel industry is already confronting a 25 per cent decline in its order books for Q4 of 2022 due to the softening of global markets.

‘The IMF in its Article IV Consultation in March, identified corporate and personal income tax exemptions (CIT and PIT) to have eroded the effectiveness of the 2017 Inland Revenue Act (IRA), paving the way to large revenue losses. This prompted the rationale to the current proposal to increase the corporate income tax rate. As Sri Lanka only collected 7.7 per cent of its GDP in taxes in 20211, the objective of the IMF is to increase revenue collection to finance social services, critical infrastructure and public goods.

‘JAAF fully understands and supports the need for the proposed tax reforms as the government is challenged for options to raise much-needed revenue. However, while the policy is well-intended, the resulting consequences are dire and may have disastrous outcomes for an industry that is striving to increase export income, local value addition, foreign direct investments, sustaining employee security and economic growth.

‘However, it is crucial that the government takes note of the following concerns prior to implementing the increase in corporate taxation for exporters to 30 per cent.

‘Firstly, export industries do not operate in isolation and are in constant fierce competition with regional competitors. This means that investors and buyers are actively conscious of the cost of doing business. Therefore, businesses rationalise the pros and cons and affirm business that would favour their operations. This may lead to shifting to countries offering lower costs of operation. Sri Lanka is already disadvantaged in comparison to regional peers who have better trade agreements and more liberal trade policies. Further tightening bottom lines for exporters to pay a CIT rate higher than that of Bangladesh, Vietnam, Thailand and Indonesia for example will hurt the country’s ability to remain competitive in this region.

‘Further, it is worthy to note that geographically smaller countries like Hong Kong, Singapore and Dubai are modelled on low taxes at early stages of economic growth. Even today, Singapore’s corporate income tax is imposed at a flat rate of 17 per cent with partial tax exemptions and a three-year start-up exemption extended to qualifying start-up companies. It is only larger economies like India with a sizeable domestic market that are able to impose higher tax rates than regional peers.

‘Increased corporate income taxes also carry the potential to discourage the value addition of existing export businesses. For example, businesses will have reduced incentive to further reinvest their reduced profits into research and innovation and other possible avenues for product diversification and product quality improvement. In the medium to long term, this may erode Sri Lanka’s hard-won position as a hub for sophisticated, innovative and ethics-based apparel manufacturing. With this, Sri Lanka also runs the risk of gaining the reputation of a cost centre model that doesn’t necessarily contribute to the profit-making process of a business but still incurs costs for low-value product creation.

‘A growing body of literature has established that higher taxes and higher compliance costs consistently drives more of the economy underground and beyond the reach of the tax collector. The National Bureau for Economic Research confirms this by reporting that as tax rates rise above the median level of 34 per cent, the extent of evasion rises dramatically. This research also found that on average, a 1 per cent increase in the tax rate results in a 3 per cent increase in tax evasion. Tax non-compliance and tax evasion historically have been major sources of revenue loss to the Sri Lankan government. The ‘Parliamentary Committee on Public Accounts (COPA) disclosed that the Inland Revenue Department has been deprived of approximately LKR 144 Bn just last year alone due to tax evasion. In this context, JAAF has severe concerns about the doubling of corporate tax rates at a time of extreme economic distress, which may prompt businesses to evade tax compliance which will deem the very intentions of this policy of increasing government revenue, counterproductive and redundant.

‘The apparel industry is already heading into uncertainty in the next few months due to rising inflation in the biggest export markets, disruptions in global supply chains and geopolitical tensions. Although the industry is confident that this is a temporary predicament and the industry has the capacity to emerge resilient, the timing is not necessarily be prudent and will create a further tough environment for exporters in terms of policy.

‘The apparel industry is determined to direct Sri Lanka into prosperity through the creation of a competitive export-oriented market economy. Therefore, JAAF urges the government to rethink the policy of increasing the corporate income tax rate by 100 per cent (which is from the concessionary 15 per cent to 30 per cent) allowing the apparel industry and all exporters to remain competitive and engage in business and investment in the region.

‘In conclusion, Secretary General of JAAF Yohan Lawrence says, “The apparel industry, which is the largest merchandise exporter reaffirms its commitment to continually support the government in its efforts to reduce the fiscal deficit. JAAF fully supports mechanisms and processes to improve the tax administration and collection and broadening of the tax base which will lead to Sri Lanka to redirect the path of recovery and growth.”


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Business

Shark and Ray Karawala

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4 hours ago

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2026/04/5

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Sun drying of ray meat

When we buy shark dry fish (Mora Karawala), do we really know what species we are consuming? What if endangered sharks are hiding in our meal? Most consumers are unaware.

In Sri Lanka, dried fish is more than food; it is a flavour, a tradition and a way of life. Affordable, long-lasting, and rich in taste, it has become a staple across the island, mainly in rural communities, the dry zone, and hill country. While most fish are eaten fresh, about 14% of the catch is preserved through age-old methods, such as salting, sun drying, smoking and fermentation. Whether served as a main dish (Karawala) or as a flavourful condiment (Umbalakada), dried fish has secured a special place on Sri Lankan plates.

Today, nearly two-thirds of the demand for dry fish is met locally, with dried sharks being the most common and popular in markets. And many people believe that milk sharks are particularly nutritious for lactating mothers.

Typically, part of the excess fish supply in peak seasons, fish arrive late from multiday fishing boats, fish from the bottom of nets, fish that are susceptible to quick spoilage or have low market appeal, are used to produce dry fish rather than letting this resource go to waste. In many coastal villages, drying fish is carried out at the fishing “waadi” (fishing villages/houses) level, often led by women as a means of earning supplementary income.

But this comes with a cost. Sharks and Rays are slow-growing, late maturing and producing only a few young cannot keep up with rising demand. Sharks and Rays are captured by large-scale artisanal fisheries and often retained as bycatch. Mainly exploited for their meat and other derivatives, including gill plates, fins, and skins.  Overfishing has pushed their populations into serious decline.

In Sri Lanka, over 60–70% of shark and ray species are threatened with extinction according to the IUCN Red List, with many others listed as Data Deficient — meaning their true status may be even worse. Only a handful of species might be considered less at risk, but even those assessments are uncertain.

Sun drying of ray meat

Once dried, it becomes nearly impossible to identify which species are being sold. Drying removes distinguishing features, making it impossible to verify the species or ensure sustainability. Labelling is virtually non-existent, and consumers have no reliable way to tell which species they are purchasing.

This means endangered sharks are likely ending up on plates across the country — without anyone realising it. Given the high proportion of threatened species and the lack of transparency, the safest and most responsible choice is to avoid all shark-based dried fish entirely.

By choosing alternative dried fish products made from more sustainable species, we can protect Sri Lanka’s marine biodiversity and ensure that our cultural traditions remain part of a future where sharks still swim in our oceans.

About the Author:

Apsara Rupasinghe, a zoologist with a BSc (Hons) Degree in Zoology, is pursuing MPhil research on shark and ray genetics at BRT-FiPo, with a background in conservation genetics and population genetics. Her work involves combining genetics and conservation to improve species identification and protect endangered elasmobranch species. Apsara pays special attention to the dry fish industry in Sri Lanka as part of her research.

by Apsara Rupasinghe

(Researcher, Fisheries and Policy Programme, Blue Resources Trust)

 

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SPAR Sri Lanka opens first Kandy outlet, redefining modern retail in hill capital

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4 hours ago

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2026/04/5

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From left to right : Oliver Sabatino- General Manager, Daham Gunasena - Director Commercial, Kumar De Silva Chief Executive Officer, Pasan De Siva Head of Finance , Kumila Gunasekera- Head of new business Development Chamira Suraweera Head of HR, Mevan Fernando Head of IT.

SPAR Sri Lanka marked a significant milestone with the opening of its 12th outlet—its first in the historic city of Kandy and only the second outside the Western Province. Established in 2018 as a joint venture between SPAR South Africa Group and Ceylon Biscuits Limited, SPAR Sri Lanka combines global expertise with strong local roots.

Speaking at the launch, CEO of SPAR Sri Lanka highlighted the cultural and commercial significance of Kandy, noting that the brand’s aim is “not just to open a store, but to serve the community in a meaningful and relevant way.”

The Kandy outlet offers over 6,200 products, with nearly 3,900 locally sourced, supporting farmers, producers, and SMEs, while the remaining range includes imported SPAR international brands. Innovative features such as a dedicated pet care section, TOPs liquor store, pharmacy, and banking facilities create a one-stop lifestyle destination.

SPAR Sri Lanka is also fostering youth employment and professional development, providing structured training programs to equip staff with globally recognised retail skills. The store has created over 50 jobs in the region and supports local suppliers in meeting international standards, opening doors for broader market access.

With its SPAR2U online platform and SPAR Rewards app, customers can enjoy convenience and value, while the company’s ecosystem approach supports retailers, suppliers, and communities alike. The brand’s next expansion is scheduled in Kurunegala, underscoring SPAR Sri Lanka’s vision of reshaping retail while uplifting local economies.

Text and Pic By S.K Samaranayake 

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Sri Lanka Insurance Life Honoured at Great Managers Awards, Becoming First SOE to Achieve this Recognition

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4 hours ago

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2026/04/5

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SLIC Life team after receiving their awards (L-R) Ruchira Edirisinghe - Brand Manager, Amali Gomez – Manager Corporate & Marketing Communications, Chaminda Athauda - Deputy General Manager Life, Nalin Subasinghe – Chief Executive Officer, Jagath Welgama – Deputy General Manager National Sales, Duminda Peiris –AGM/Zonal Head, Manjula Darmaprema –Branch Manager Pilimathalawa and Uththara Kapugamage – Manager Employee Engagement

Sri Lanka Insurance Life (SLIC Life) was recognised at the prestigious ‘Great Managers Awards 2025’, held on 26th March 2026 at Cinnamon Grand, Colombo, marking a significant milestone as the first State-Owned Enterprise (SOE) to receive this recognition.

Organised by CLA Coaching in collaboration with the Colombo Leadership Academy, the awards recognise organisations and individuals who demonstrate excellence in leadership and managerial effectiveness, benchmarked against global best practices through a rigorous evaluation process.

Sri Lanka Insurance Life was recognised under the category of ‘Companies with Great Managers’, reflecting its commitment to nurturing leadership talent and building a culture that supports sustainable performance and people development.

Several SLIC Life team members were also honoured across multiple categories, highlighting the depth of leadership within the organisation. Duminda Pieris, Assistant General Manager/Zonal Head, was recognised for Driving Results and Execution Excellence, while Chaminda Athauda, Deputy General Manager – Life, received recognition for Aligning Organisational Vision. Jagath Welgama, Deputy General Manager – National Sales, and Manjula Darmaprema Branch Manager – Pilimathalawa were acknowledged for Building Team Effectiveness and Collaboration. Amali Gomez, Manager – Corporate & Marketing Communications, was recognised for Integrality and Holistic Approach. Ruchira Edirisinghe, Brand Manager, and Uththara Kapugamage, Manager – Employee Engagement, were both recognised as Great Millennial Managers.

Commenting on the achievement, Nalin Subasinghe Chief Executive Officer of Sri Lanka Insurance Life stated: “We are truly humbled and honoured to be recognised at the Great Managers Awards 2025, especially as the first State-Owned Enterprise to receive this accolade. This achievement is a testament to the strength, dedication, and professionalism of our team, who continue to demonstrate exceptional leadership across all levels of the organisation. We take great pride in this collective success.” He further added, “We also commend this initiative for its role in encouraging organisations to nurture and develop future leaders. Platforms such as these are vital in shaping strong leadership cultures that drive sustainable business success and industry-wide progress.”

This recognition underscores Sri Lanka Insurance Life’s ongoing commitment to developing its people, strengthening leadership capabilities, and fostering a high-performance culture that contributes to long-term organisational success.

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