Business
Authorized mobile importers urge SL govt. to reconsider VAT hike
A group of authorized mobile phone importers in Sri Lanka express deep concern over the Sri Lankan government’s decision to remove mobile phones from the Value Added Tax (VAT) exemptions list, coupled with a simultaneous increase in VAT from 15% to 18%, effective January 1st, 2024. This dual impact, wherein devices now not only face a sudden VAT imposition, but also at a significant rate of 18%, pose substantial challenges for the industry and the country. The importers urgently call for a critical reassessment by the authorities in light of these compounded challenges.
A press release said in this regard: ‘The timing of the VAT hike is particularly challenging for authorized mobile phone importers in the country. These companies have collaborated with the Telecommunications Regulatory Commission of Sri Lanka (TRCSL) to find viable solutions to the challenges of parallel imports. Parallel imports, or grey market goods, involve the import and sale of branded products in a market without the trademark owner’s consent. This issue has already caused a tax revenue loss of LKR 3.1 billion (USD 9.4 million) and a Forex outflow of LKR 31.6 billion (USD 96 million) via illegal channels in Sri Lanka.
‘With the sudden VAT increase, this loss is estimated to rise to 11.9 billion LKR, marking a substantial increase in tax revenue loss from illegal imports. Additionally, there is a projected further tax revenue loss to the government, amounting to a LKR 2.5 billion decline from legitimate imports. This decline is anticipated due to increased parallel import products driven by the rising prices of genuine products.
‘Moreover, the ramifications extend beyond the economic landscape. Over 10,000 direct job opportunities are now at risk, leaving families dependent on the industry—more than 15,000, including those involved in logistics, printing, branding, advertising, etc.—facing uncertainty. The policy change also jeopardizes direct Forex investment for market development by principals (ATL/BTL), putting this crucial financial support at risk. Furthermore, the spectre of a national security threat looms as parallel imports introduces unknown devices to the country, creating challenges in tracking these products.
‘Authorized mobile importers emphasize the unfortunate timing of removing cellular and electronic devices from the VAT-exempted list and the hike in VAT given the ongoing efforts by legal importers to find solutions for the persistent Parallel Imports (PI) issue.
‘Accordingly, the industry had put forward practical suggestions and is actively engaged in collaboration with the TRCSL to explore viable solutions which include proposing an option for registering already in-use PI devices at a nominal fee, introducing a Tourist SIM for the duration of the incoming visitor’s VISA period, and implementing whitelisting of non-registered IMEI from mobile networks. These initiatives aim to holistically address the challenges posed by parallel imports, foster regulatory compliance, and contribute to the development of effective policies that strike a balance between industry interests and regulatory requirements. However, the sudden imposition of VAT, and at an alarmingly high percentage while the industry was working with the TRCSL, is deeply concerning. Similar situations have been observed in countries like Pakistan and Nepal.
‘The absence of effective measures to restrict parallel imports before imposing taxes impacts legitimate imports and results in a substantial loss in government revenue. Authorized mobile importers stress the critical necessity for the government of Sri Lanka to prioritize and implement a viable solution for the parallel import problem before imposing additional taxes on the industry. This approach is urgent and essential to safeguard the industry’s interests and the government’s fiscal well-being.
‘On December 1st 2023, a meeting was convened involving the TRCSL, leading mobile brands and authorized importers. The assembly of mobile importers present included, Thushara Ratnaweera and Chaminda Silva representing Samsung, alongside Rajeev Gooneratne and Charles Wijesuriya from Gnext, Prasanna Weerakoon of JKOA, Chathura Jayawardena and Sha Bulathsinhala from Abans, and Gurubaran and Sanketh Gihan representing Vivo.’
Sri Lanka Tourism with its continuous promotional efforts with clearly defined strategy and objectives, achieved the previous full year arrivals within the 1st nine months of this year. In 2023 the total arrivals were 1,487,303. During the month of September 2024, a total number of 112,140 tourist arrivals were recorded which showed a 9% growth compared to last year. The key source markets which contributed for this achievement were India, China, UK, Germany, Australia, Maldives, Russia, Bangladesh, Spain and France.
The success was achieved through many strategic initiatives. With the tourism industry at a cross roads, “Seen is believing” influencer campaign created a huge impact to take the reality to the globe. Under this initiative, Sri Lanka Tourism Promotion Bureau (SLTPB) hosted nearly 180 media influencers from all over the world to take the positive message and to showcase the truth which supported the industry to come back gradually to normalcy.
Some of the renowned travel influencers such as Luke Martin, (popular culinary vlogger) Nusier Yassin (also known as Nas Daily) and Ashish Vidyarthi(popular Bollywood actor) brought in an immediate connect with this beautiful island which is known for its great hospitality. The recommencement of all major airlines with increased frequency and seat capacity was an indication to the industry that there is a hope for revival.
With this positive vibe, the campaign “Check in …. Sri Lanka is ready” short term digital media campaign was launched. Facilitating stakeholder participation at key Travel & Tourism fairs and exhibitions along with B to B and B to C networking sessions, a positive message was taken to the prospective travelers globally. Some events participated are ITB Berlin, IFTM Paris, ATM Dubai, WTM UK, and SATTE India.
The global recognitions achieved during the year were around 17, including the Pekoe Trail in Sri Lanka being recognized as one of the best in the world by National Geographic, Sri Lanka being recognized by the Forbes magazine as the fourth most popular travel destination for 2024, and the most recent being ranked as one of the best countries to visit in your lifetime by the CEO World magazine. This is a testimony as to why someone’s choice should be “Sri Lanka” as their next holiday destination. Sri Lanka getting into some of the top travel indexes has made the destination a desired choice.
Building the destination brand positioning on three key pillars “Compact”, “Diverse” and “Authentic” will differentiate Sri Lanka from the other destinations and give the travelers compelling reasons to visit and revisit our beautiful island.
Sri Lanka Tourism
Business
Bourse’ s bullishness intensifies in the wake of IMF’s positive responses to SL’s tax proposals
By Hiran H.Senewiratne
The stock market was extremely bullish yesterday following IMF representatives’ positive response to Sri Lanka’s requests that the tax structure, including PAYE tax, be adjusted, stock market analyst said.
The IMF delegation was in Colombo to review implementation of IMF recommendations for Sri Lanka. Apart from that, a proposal for restructuring the sovereign bond issue also had a positive impact on the stock market, thus pushing the market to positive territory. Both indices moved upwards; the All Share Price Index crossed the 12000 mark for the first time since July 3, with the index gaining 123.30 points (1.04 percent) to close at 12,053.40.
Turnover stood at 2.83 billion with four crossings. Those crossings were reported in Sampath Bank, which crossed 11 million shares to the tune of Rs 884 million; its shares sold at Rs 80, HNB 360,000 shares crossed for Rs 77.4 million; its shares traded at Rs 115, Chevron Lubricants 339,000 shares crossed for Rs 42.2 million; its shares traded at Rs 125 and Commercial Bank 250,000 shares crossed to the tune of Rs 26.3 million; its shares fetched Rs 105.
In the retail market companies that mainly contributed to the turnover were; Sampath Bank Rs 316 million (3.9 million shares traded), HNB Rs 208 million (971,000 shares traded), Commercial Bank Rs 131 million (1.24 million shares traded), JKH Rs 123 million (653,000 shares traded), PickMe Rs 63.5 million (1.6 million shares traded), Hayleys Rs 54 million (545,000 shares traded). During the day 71.4 million share volumes changed hands in 12597 transactions.
It is said that among the numerous sectors, the banking sector performed well. The Sampath Bank crossing and retail trading contributed approximately 43 percent to the turnover, while the manufacturing sector contributed the second highest turnover to the market, mainly due to Chevron and JKH.
Yesterday the rupee was quoted at Rs 293.70/90 to the US dollar, up from Rs 294.00/50 to the US dollar a day earlier, while bond yields were steady, dealers said.
The UN Global Compact regional flagship event, ‘Forward Faster Now | Asia & Oceania’, held in Kuala Lumpur on August 5-6, 2024, marked a pivotal moment for sustainable business action across the region. Organized by the United Nations Global Compact in collaboration with 16 Global Compact Country Networks and Country Offices, the inaugural event brought together high-level executives, government leaders, and sustainability experts from across Asia and Oceania.
The landmark event aimed to accelerate sustainable business practices, build partnerships, and highlight impactful stories of corporate sustainability. It served as a platform for regional peer learning and exchange, focusing on key themes such as Sustainable Development Goals (SDGs) progress, business commitment to sustainability, and integrating sustainability into corporate operations.
Forward Faster Now | Asia & Oceania’ was more than just a gathering; it called participants to action. Leaders from various countries including Sri Lanka’s business community actively shaped the narrative.
The event marked a turning point for participating international and Sri Lanka corporate leaders, showcasing their influence far beyond national borders. Their unwavering commitment to the SDGs and sustainable development positions them as true champions of change. The event provided them with a platform to boldly demonstrate their leadership in shaping a sustainable future for the region.
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